Preamble

The House met at half-past Two o'clock

PRAYERS

[MR. SPEAKER in the Chair]

Oral Answers to Questions — WALES

AIDS

Sir Raymond Gower: To ask the Secretary of State for Wales what is the number of persons in Wales now diagnosed as having AIDS; what has been the increase during the past 12 months; and what estimate has been made of the probable increase over the next 12 months.

The Parliamentary Under-Secretary of State for Wales (Mr. Ian Grist): At the end of February 1988, 19 cases of AIDS in Wales had been reported to the communicable diseases surveillance centre, of whom 15 died. Comparable figures for the end of February 1987 were 11 and nine. It is extremely difficult to make a reliable estimate for Wales.

Sir Raymond Gower: Is my hon. Friend aware that a number of recent studies, including one in the United States of America, suggest that the ultimate number of people suffering from the disease will be far greater than anticipated'? I do not wish to be alarmist, but will there be an upgrading of current plans to meet that possibility?

Mr. Grist: I have noted the various interesting results of studies into mortality rates for men aged between 15

and 64. My hon. Friend may be pleased to know that I have every confidence in the existing voluntary system of reporting AIDS deaths, although I am aware that not all are recorded. There may be HIV-related deaths that do not fall within the clinical definition of AIDS.

Mr. Alan W. Williams: Do not the World Health Organisation and all medical authorities recognise AIDS as the greatest threat to human health this century? Are not the number of AIDS cases doubling every 12 months? Projected over 10 years, does that not pose a serious threat to a large number, perhaps even the majority, of the world's population?
In view of that enormous threat, will the Minister ask his right hon. Friend the Secretary of State to use his voice in the Cabinet to plead for a massive increase in research funding so that a cure can be found for AIDS? Should not the Government introduce a major public education programme to prevent the spread of AIDS through promiscuity?

Mr. Grist: To begin at the end, a massive public education campaign has been launched through the Health Education Council and, indeed, the Welsh Health Promotion Authority, which has been active in schools, local authorities and elsewhere. I shall certainly pass on to my right hon. Friend the hon. Gentleman's point about international research. Indeed, I am sure that my right hon. Friend will read his comments.

Labour Statistics

Sir Anthony Meyer: To ask the Secretary of State for Wales what was the combined total of persons employed in Wales in the coal and steel industries in 1979; what it is in 1988; and what are the equivalent figures for the electronic and information technology industries.

The Secretary of State for Wales (Mr. Peter Walker): Employment in the steel industry and on the colliery books of British Coal amounted to 86,000 in 1979 and to 32,100 in 1987. Employment in the electronic and information technology industries in the same years was 17,500 and 23,100 respectively. I am pleased to tell the House that


Race Electronics of Talbot Green, Mid Glamorgan, today announced a major additional investment of £11 million that will, over the next few years, produce 1,100 new jobs.

Sir Anthony Meyer: I am grateful to my right hon. Friend for that reply, which I am sure will be greeted with enormous pleasure in south Wales. Does that trend show the advantages that will come to Wales from modernising the approach to the older, more traditional industries and, more important, the introduction of the new science-based industries?

Mr. Walker: Indeed, and I hope that the trend will continue.

Mr. Barry Jones: When the right hon. Gentleman meets tha Alyn and Deeside council later this week to discuss modern industries and electronics, will he bear in mind that the council has good plans for the now redundant site of Connah's Quay power station, which could accommodate modern industry? However, the plan has hit a snag. Will the right hon. Gentleman listen carefully and sympathetically to the problems of the district council, so that Alyn and Deeside has the benefit of that site?

Mr. Walker: I cannot comment on the specific scheme, but I shall certainly listen to the hon. Gentleman's constituents.

Dr. Thomas: Is the right hon. Gentleman aware that we warmly welcome any announcements of job creation in Wales? Does he agree that for the future of the Welsh economy, it is essential that design, development and research development are carried out within Wales? Would that not amount to a more genuine science-based economy than would intermediate or low technology?

Mr. Walker: Yes, which is why I am hopeful that developments in the Welsh universities, through new grants to encourage research as joint ventures between industrial companies and universities, will have a considerable impact in Wales.

Mr. Alan Williams: Does the right hon. Gentleman accept that we welcome all new jobs in electronic and information technology, even though, as his figures show, they fall far short of the number of jobs that are needed? Does he recognise that many of the predominantly women production workers in the new industries earn little more than half the average national wage? The new industries are not replacing the lost, high-paid, male jobs.
As 120,000 fewer people in Wales are now either employed or self-employed than when the Government took office, is the right hon. Gentleman not concerned about the latest unemployment figures, which show that Wales is eighth worst of the 11 regions in the decline in unemployment since February 1987?

Mr. Walker: I am gald to say that, in fact in terms of the rate of reduction on the normal basis that has been used by all Governments—[Interruption.]—Wales is in the top three of the league. So far as the figures are concerned, I note, as always, the deep depression of the right hon. Gentleman. In the past year unemployment in Wales has come down by more than 25,000. The people of Wales find the right hon. Gentleman totally out of touch with the mood of the country.

Labour Statistics

Mr. Coleman: To ask the Secretary of State for Wales what are the latest unemployment figures for (i) Wales, (ii) West Glamorgan and (iii) Neath  and what were the comparable figures for the same period in 1979.

Mr. Peter Walker: On 11 February 1988 the number of unemployed claimants in Wales, West Glamorgan, and Neath districts were 145,458, 19,461 and 3,456 respectively. Unadjusted figures for 1979 are not available on a basis that enables a valid comparison to be made.

Mr. Coleman: What would the right hon. Gentleman's reaction be to those figures if they occurred in his own constituency? As for the quality of the jobs to which he has referred this afternoon, do they carry the same earning power as those that have been lost? What assurances can he give to places that are suffering colliery closures, such as my own area with the Abernant colliery, that new jobs will replace the jobs that have been lost?

Mr. Walker: I deplore unemployment anywhere. In the recent recession, there was a substantial increase in unemployment in my constituency. Indeed, it reached the kind of figures that is now the average for Wales as a whole. In terms of the jobs coming into Wales, since the last Question Time we have had announcements from major American, German, Japanese and Welsh firms, which are all putting in a great deal of investment and providing many new jobs. It is time that the hon. Gentleman, and others, cheered up about it.

Mr. Raffan: Does my right hon. Friend agree that the local economy in north-east Wales is recovering extremely strongly, as can be seen by the fact that unemployment has fallen faster there than in any other parts of Wales during the past year—in Delyn by 24·1 per cent., in Alyn and Deeside by 22·9 per cent. and in Wrexham by 22·5 per cent.?

Mr. Walker: Yes, I am pleased that the latest figures for advertisements for vacancies show an enormous increase. For example, the latest figures for the Liverpool Daily Post show an increase of 33 per cent. and the Western Mail and South Wales Echo show an increase of 47 per cent. over the same time last year.

Mr. Livsey: Does the Secretary of State agree that the cuts in home improvement grants in the Budget will create more unemployment in Wales, especially as we have the poorest housing stock in Britain? Does he not think that we should retain those grants?

Mr. Walker: I was amused to see the great outcry about that. I hope that the hon. Gentleman will put this matter into perspective. On the average loan for house improvements the result of the Budget change will be a detriment of £1·32 per week, but for the same person the tax savings from the Budget will be £4·58 per week. Therefore, the hon. Gentleman's suggestion that the Budget is bad is totally wrong.

Mr. Roy Hughes: Do those figures not reveal that yet again in terms of unemployment south Wales is the blackspot of Europe? Will the Secretary of State reconsider the point made by my right hon. Friend the Member for Swansea, West (Mr. Williams), that in the past 12 months—February to February—our decline in employment is the eighth worst of 11 regions? Would this


not be a good time to launch a housing drive, especially when one considers that Scotland, with double our population, spends four times the amount that we spend on housing? Perhaps the Secretary of State is perfectly content to see homelessness rise and Rachmanism take over.

Mr. Walker: The one thing that the hon. Gentleman is always guaranteed to do is to depict south Wales as a blackspot, but he does great harm to it every time he does so. I am glad to say that this year the local authorities alone in the valleys of south Wales will spend £48 million on housing improvements. The success of this Government in improving the housing of Wales compared with the failure of the Labour Government is remarkable.

Wales Tourist Board

Mr. Wigley: To ask the Secretary of State for Wales when he last met the chairman of the Wales tourist board; and what matters were discussed.

The Minister of State, Welsh Office (Mr. Wyn Roberts): My right hon. Friend last met the chairman on 13 January and discussed a range of issues. I met the chairman and the board on 19 February.

Mr. Wigley: Will the Minister tell the House whether the Secretary of State has discussed with the chairman of the Wales tourist board the effects of the arson campaign on second homes in Wales, which we all deprecate and condemn entirely? Has he had any response from the tourist board of the effect on the tourist industry, in view of the 130 houses which have now been burnt and the many people who are now having difficulty in getting insurance on holiday homes? What initiatives has his right hon. Friend taken to bring this campaign to an end?

Mr. Roberts: I am glad to hear the hon. Gentleman condemn the arson campaign, and this morning I was glad to read in the Liverpool Daily Post the condemnation of the hon. Member for Meirionnydd Nant Conwy (Dr. Thomas). Naturally, my right hon. Friend and I join in that condemnation. We wholly deplore the arson campaign. The matter was not specifically discussed with the Wales tourst board, which is not the responsible body. It is a matter for the police and the Home Office.

Mrs. Clwyd: As Welsh lamb is a delicacy much enjoyed by tourists, was the Minister able to assure the chairman of the Wales tourist board that no radioactive lamb contaminated above the official safety levels was sold in Wales, as it undoubtedly was in England due to official bungling?

Mr. Roberts: I beg to doubt the hon. Lady's statement. Naturally we have taken every possible precaution to ensure that lamb that contains radiation above the accepted levels has not been sold. We have taken every possible step to prevent that, and I am glad to say that the outlook for the future is improving.

Sir Raymond Gower: Is it not singularly inappropriate at this time that there should be this campaign of burning down holiday homes, in view of the fact that numerous people in many countries, including Wales, are now buying second homes in other countries, such as Spain, Italy and France? Is that not incongruous?

Mr. Roberts: My hon. Friend is absolutely right, and I think that the entire House deplores the arson campaign

that has been going on, as the hon. Member for Caernarfon (Mr. Wigley) described. We wholly deplore it. It is needless, cowardly and thoroughly condemned by the people of Wales as a whole. It does irreparable harm to tourism and our reputation as a hospitable nation.

Opera

Mr. Livsey: To ask the Secretary of State for Wales what plans he has to encourage the development of opera in Wales.

Mr. Wyn Roberts: The Government's substantial support for the arts is channelled through the Arts Council of Great Britain in the first instance. Opera in Wales has been a major beneficiary of Arts Council grants, which have done much to encourage its development. I hope that that development will continue.

Mr. Livsey: We in Wales have an outstanding reputation for opera. Will the Minister say when there may he a decision on the future of Craig-y-nos castle in my constituency, the home of the late Adelina Patti, where prominent opera lovers in Wales, including Sir Geraint Evans, are keen to establish a music centre to train young opera singers?

Mr. Roberts: Many people would like to see the former home of Adelina Patti become the centre for opera and other kinds of music. There have been several other suggestions for the possible uses for Craig-y-nos, including the theatre. Tenders for the freehold of the property are being carefully considered and we shall take all relevant factors into account in reaching a decision. My right hon. Friend has already taken action to increase the protection of the theatre at Craig-y-nos by announcing its listing to grade 1.

Sir Anthony Meyer: Does my hon. Friend know of the proposal by a private developer, in co-operation with Rhuddlan borough council, to build a theatre adjacent to the Sun centre, which would provide a home for the Welsh National Opera when it visits north Wales? Will he take a benevolent interest in the project?

Mr. Roberts: We take a benevolent interest in all proposals to increase the number of venues available for the Welsh National Opera company. My hon. Friend will be aware that the proposal that he mentioned is not the only one. We are proud of the Welsh National Opera company and are anxious to see it succeed still further.

Mr. Coleman: I recognise the Welsh National Opera company's contribution to opera. Is the Minister aware that Craig-y-nos is not dependent on the Welsh National Opera for operatic performances? What help will he give to sustain possible future productions and the continuation of productions at Craig-y-nos over the years?

Mr. Roberts: I am sure that the hon. Gentleman has sung there with the Neath operatic society. Perhaps the theatre should be kept in his honour as well as that of Adelina Patti. Of course, whatever assistance is given to any future performance is basically a matter for the Arts Council.

Welsh Craft Industry

Mr. Raffan: To ask the Secretary of State for Wales what proposals he has to implement the recommendations


of Mr. Tony Ball's Welsh craft industry study for a coordinated marketing policy for Wales and Welsh products, to be implemented by the Welsh Development Agency, Mid Wales Development, the Welsh tourist board and other Welsh agencies.

Mr. Peter Walker: There has been strong endorsement of Mr. Tony Ball's Welsh craft industry study and of his ideas for developing a more co-ordinated strategy for promoting Wales and its products. I shall be considering with the main bodies concerned how best to implement the recommendations.

Mr. Raffan: Does my right hon. Friend agree that if a co-ordinated all-Wales marketing effort is to be achieved the Welsh Office must take the initiative? Does he also agree that such an integrated marketing approach could only increase the impact of each Welsh agency's marketing, without undermining their independence?

Mr. Walker: The report showed many weaknesses and duplications in the existing systems. As I said, I shall have further discussion with the bodies involved, and then we will come to our conclusions.

Mr. Alex Carlile: When the right hon. Gentleman reaches his conclusions, will he bear in mind that many small craft producers in Wales consider that the WDA and Mid-Wales Development are rather remote? Will he take steps to ensure that the distance between them is reduced as far as possible?

Mr. Walker: Part of Mr. Ball's recommendation was that, in the manner in which the system operated at the moment, many smaller craft users were unable to identify exactly where they should go and from whom they should obtain advice. The recommendations pointing out that they should have freely available to them a point at which they can seek any advice or help are important.

Mr. Ray Powell: Is the Secretary of State aware that the Welsh craft industry would be sadly neglected if the Department of Employment were to close the workshop for the blind in Pontypridd? Is he aware also that proposals have been under discussion for the past two years? Only a matter of weeks ago an Employment Minister decided that he would cancel any financial arrangements for the new workshop in Pontypridd. Will the Secretary of State carry out an investigation and ensure that the application for a workshop for the blind people of mid-Glamorgan is renewed and that a new building is provided?

Mr. Walker: That is a matter for my right hon. Friend the Secretary of State for Employment. I gather that he or one of his Ministers will have talks with at least one Welsh Member in the near future.

Hospital Waiting Lists

Dr. Marek: To ask the Secretary of State for Wales what is the latest information he has on the number of people waiting for in-patient treatment as (a) urgent and (b) non-urgent cases in (i) Clwyd and (ii) Wales.

Mr. Grist: The number of people waiting for urgent inpatient treatment in Clwyd at 30 September 1987 was 383, and in Wales 3,596. The numbers waiting for non-urgent in-patient treatment were 4,491 and 36,262 respectively.

Dr. Marek: Is the hon. Gentleman aware of the promise that he made last August? He pledged that by the spring

of 1988 no patient waiting for an urgent operation should have to wait more than one month, and no patient waiting for a non-urgent operation should have to wait for more than one year. Today is the first day of spring. Every person in Wales knows that the waiting list is as bad as it ever was. Patients in the main specialties, such as general surgery, orthopaedics, ENT, and urology are dying before they get to the top of the waiting list. Did the Minister make his pledge last August out of simple political bravado, to build up the hopes of Welsh people, only to dash them cruelly today? If he did not, what has gone wrong?

Mr. Grist: The hon. Gentleman is spreading alarm rather unnecessarily. He mentioned particular sectors, which he also brought up in the last Welsh Grand Committee—general surgery, ophthalmology, urology and orthopaedics. I am pleased to say that in Clwyd the authority has reported that the urgent in-patient list in these specifications will meet targets. In addition, urology and ophthalmology non-urgent in-patient lists will meet targets in the same county.

Mr. Gwilym Jones: I naturally urge my hon. Friend to increase further spending on the National Health Service at the earliest opportunity. However, his campaign to improve waiting-list performance figures in Wales has already shown itself to be a remarkably effective way of achieving value for money and, at the same time, a worthwhile improvement in health performances.

Mr. Grist: My hon. Friend is right. Increased expenditure on the Health Service under this Government has led to a greatly increased provision of treatment for patients — for example, 24 per cent. more in-patients were treated than under the last Labour Government.

Mr. Alan Williams: Did the Under-Secretary of State notice that, just a week ago, the Chancellor of the Exchequer gave away over £4,000 million, much of it to people who did not need it, when it could have been used to help our health and social services? Does the hon. Gentleman recollect a claim made by the Secretary of State for Wales in The Observer that when he went to the Cabinet, he received every penny for which he asked? In view of the appalling waiting lists to which the hon. Gentleman has just confessed, which are even worse than the temporary peak of the winter of discontent, does he think that the Secretary of State asked for enough? How does he explain to the people of Wales why the Secretary of State did not ask for more?

Mr. Grist: It is worth pointing out that the right hon. Gentleman knows very well that the Budget is not to do with expenditure. He is trying to beguile the general public, who may not appreciate that point. In the expenditure figures in the autumn, spending on the Health Service rose by £700 million more than the expenditure of a year before, which the right hon. Gentleman's party held out to be an electoral bribe.

Wales Tourist Board

Mr. Nicholas Bennett: To ask the Secretary of State for Wales what was the total amount allocated for (i) publicity and (ii) marketing, within the annual budget for the Wales tourist board in 1980–81 and 1987–88.

Mr. Wyn Roberts: The Wales tourist board's gross expenditure on marketing — including publicity which


cannot be separately distinguished — increased from £1·55 million in 1980–81 to an estimated £3·493 million in 1987–88.

Mr. Bennett: I thank my hon. Friend for that reply. Is he aware of the concern that is felt in many parts of Wales that the board's publicity and marketing budget is still less than 50 per cent. of total expenditure? As that ought to be the major part of its work, will he ask the board to increase the proportion that it spends on these vital sectors?

Mr. Roberts: The board spends a substantial proportion of its total budget on marketing, which is a very important part of its work, but it also has certain other costs, including expenditure on section 4 grants.

Mr. Ieuan Wyn Jones: Will the Minister suggest to the chairman of the Wales tourist board that he arranges a meeting with the chairman of the Highlands and Islands Development Board, which has had a marked success in its publicity and marketing, and has developed a tourist initiative which works in harmony with the local community and benefits the local economy?

Mr. Roberts: I am sure that all these non-governmental bodies have a great deal to learn from each other, but no one should underestimate the achievements of the Wales tourist board or the money that the Government have made available to it. The allocation for the current year is some £8·7 million and for next year it will be £9·2 million —an increase of 9 per cent. There has been an increase since 1983–84 of some 90 per cent. in the funds made available to the board, and it is making good use of those funds.

Sir Raymond Gower: Should not my hon. Friend reconsider those figures in the light of the fact that the Wales tourist board will have to make substantial additional expenditure as it embarks upon an important programme of grading of hotels?

Mr. Roberts: An increase of 9 per cent. in the board's resources for next year is very substantial, and this year we are making available additional funds of about £250,000 to promote marketing. As for hotel registration, the board already operates a voluntary system.

General Certificate of Secondary Education

Mr. Geraint Howells: To ask the Secretary of State for Wales if he will make a statement on the implementation of the GCSE examination in Wales.

Mr. Wyn Roberts: The hon. Gentleman will be aware from an interim report published on 8 March that Her Majesty's Inspectorate of Schools found that the GCSE is being successfully introduced. It is leading to better teaching and has succeeded in raising the motivation of pupils.

Mr. Howells: The Minister will be aware that many leading educationists in Wales are worried about the plight of 16-year-old students. They say that many are under a great deal of stress and that they are overworked. If so, what plans does the Minister have to remedy the problem?

Mr. Roberts: I, too, have read the article from which the hon. Gentleman appears to be quoting, but in Wales there are others who welcome this development, and the HMI report is very favourable. We have spent more money on the introduction of this examination than on any previous examination.

Dr. Thomas: Does the Minister accept that we endorse what he has said about the performance of the examination? Will he ensure that the proposals in the Education Reform Bill, which will be the subject of scrutiny this week, will not undermine the positive gains made in the assessment used for GCSE, and that the testing which the Secretary of State for Education and Science has in mind will not revert to more traditional roles but will retain the gains made by the GCSE?

Mr. Roberts: We very much hope that the Education Reform Bill will enhance the performance of pupils. After all, the GCSE is intended to stretch children's ability. As for assessment, I am happy to tell the hon. Gentleman that in the coming year we shall spend about £855,000 in Wales on in-service assessment training for teachers.

Mr. Win Griffiths: Will the Minister join me in praising the efforts of teachers who have been working in extremely difficult conditions successfully to introduce the GCSE in Wales? Will he assure me that his Department will monitor the examination carefully, because early evidence suggests that pupils of average and below-average ability are having more than a little difficulty with the examination and that its purpose may be somewhat undermined?

Mr. Roberts: As the inspectorate acknowledged, there are some teething troubles, but that is due simply to the introduction of the new examination. On the whole, it is progressing favourably. I join the hon. Gentleman in paying tribute to the teachers, who have done extremely well in introducing the examination, amd I am happy to say that in the current year we have spent about £859,000 on training teachers in respect of the GCSE.

Hospital and Health Plans

Mr. Michael: To ask the Secretary of State for Wales what steps he will take to ensure full public availability of financial information on hospital and other health plans in South Glamorgan and in Wales as a whole.

Mr. Grist: It is already my right hon. Friend's policy that the strategic health service plans submitted to him for his approval by health authorities should contain a reconciliation of the district's service objectives and priorities with the resource assumptions provided by the Department.

Mr. Michael: I am grateful to the Under-Secretary of State for that reply, and I am sure he will share my concern that a letter that I received this weekend from the chairman of the health authority seems to suggest that two promises will be broken. The first was that full financial information would be made available, although delayed from the date in December that was originally promised. The second was that the consultation period would be extended for the financial appraisal to be taken into account. Obviously, if the information was not made available, the extension will not make much sense.
Does the hon. Gentleman agree that the matter is of grave concern, and that it is impossible for us in the South Glamorgan area to take a sensible part in discussion about the plans? Will he draw to the attention of the chairman of the health authority the very sensible reply that he gave to my first question?

Mr. Grist: I am unable to comment on any promise that may or may not have been made to the hon. Gentleman.


On the other hand, I think he will understand that, in the initial stages of consultation, it is not normal for the financial implications to be spelt out. Normally, that comes later. As far as I can see, the procedure is following its ordinary course and the guidelines laid down by the Welsh Office.

Mr. Rowlands: Will the Minister tell the House how much it would cost to reopen the high dependency unit in St. Tydfil hospital in Merthyr Tydfil? Can he give no fresh hope that extra resources will be provided to reopen the unit, which has £120,000 of equipment lying idle?

Mr. Grist: I see that the Mid-Glamorgan health authority has stated its intention to operate the unit in the long-term and that there is no question of closing it. It also claims that it is making a saving, with only three places operative up to this date, of some £30,000.

Mr. Nicholas Bennett: Will my hon. Friend consider seriously the representations that he is receiving from the Pembrokeshire health authority concerning the roof of Withybush hospital, which has been seriously damaged in recent years because of its construction? The health authority is expected to find the £500,000 to repair it when, in the first place, it was built under Welsh Office construction supervision. Moreover, its quality was seriously reduced because of the cuts under the last Government.

Mr. Grist: We are in negotiation with the Pembrokeshire health authority, to which we have made an offer.

Mr. Roy Hughes: Will the Minister also give an undertaking to reveal the financial and health costs of introducing charges for eye tests? Are such charges not likely to hinder detection of illness and lead to a further deterioration in the health of the people of Wales? By supporting the charges—as he is on record as doing—in conjunction with the massive tax handouts which will largely benefit the south-east of England, is the Minister not proving himself yet again to be a defender of the indefensible?

Mr. Grist: I shall ignore the second half of that question. I think that the hon. Gentleman knows the argument very well. We do not expect that those who pay for the eye tests—and many, as he knows, will not—will pay £10, the figure that has been put around. They may not be charged at all, because of competition. Opticians will still be under an obligation to report any disease or injury to the general practitioners of their patients, so there should be no spread of disease —despite what has, unfortunately and rather irresponsibly, been put around.

Rates

Mr Gareth Wardell: To ask the Secretary of State for Wales if he will make a statement on the implications for rates in Wales following the House of Lords judgment on 11 February in the case of Clement v. Addis Ltd.

Mr. Peter Walker: I refer the hon. Gentleman to the statement made on 9 March by my right hon. Friend the Secretary of State for the Environment.

Mr. Wardell: May I put on record my appreciation to the Secretary of State for any assistance that he gave in his discussions with his right hon. Friend the Secretary of

State for the Environment preceding that statement? May I ask him specifically whether there is any opportunity whatever for the Welsh Office to make any additional financial help available to Swansea city council and West Glamorgan county council, which have suffered as a result of this decision of 11 February?

Mr. Walker: Provision is made so that the effects of an event such as this can be dealt with under section 67 of the Local Government Planning and Land Act 1980. We are having discussions to see whether that applies in this case.

Health Service Staff

Mr. Alex Carlile: To ask the Secretary of State for Wales if he will make a statement on staffing levels in the Health Service in Wales.

Mr. Peter Walker: Operational and managerial responsibility for the determination of staffing levels rests with individual health authorities. Since the Government took office there has been an overall increase of 16 per cent. in front-line staff and of 11 per cent. overall.

Mr. Carlile: Is the Secretary of State aware of the recent British Medical Association report which revealed that there was a 50 per cent. shortage of medical record staff in Wales, with the result that treatment is being delayed, and carried out less efficiently in some cases, and that there are great problems of marrying laboratory results to medical records?

Mr. Walker: I hope that the arrangements to be made for manpower surveillance over the whole of the Health Service will help to make sure that manpower resources are available where they are most needed.

Oral Answers to Questions — DUCHY OF LANCASTER

City of Leicester

Mr. Janner: To ask the Chancellor of the Duchy of Lancaster when he next intends to visit those parts of the city of Leicester which are Duchy property.

The Chancellor of the Duchy of Lancaster (Mr. Kenneth Clarke): I hope to visit the Duchy interests in Leicester as soon as the opportunity to do so arises.

Mr. Janner: Since the lamentable defeat of Simon de Montfort, Earl of Leicester, in 1261, is it not right that the Minister and his Duchy acquired responsibility for the honour and county of Leicester? As he has now very wisely given up his responsibility for fiddling the unemployment figures and instead is turning his attention to covering up the adverse trade balance of the nation, may I offer him the opportunity to take advantage of Leicester as soon as possible by applying for admission to either the Trinity hospital or the Wyggeston hospital, both of which I understand he still owns?

Mr. Clarke: The penalties of political defeat were rather severe in 1265, so it is the case that the Duchy of Lancaster acquired entirely the honour and county of Leicester in the 13th century. We now own one property in the high street and have an interest in the Wyggeston and Trinity hospitals. I trust that the way in which the Duchy administers them gives rise to no complaints. The economy of Leicester is thriving rather well. Unemployment is falling and employment is rising. The


Highfields task force, for which I am responsible in Leicester, is achieving great success in getting projects moving in that difficult part of the town.

Oral Answers to Questions — CHURCH COMMISSIONERS

Education Reform

Mr. John Marshall: To ask the right hon. Member for Selby, answering for the Church Commissioners, what representations the Church Commissioners have received on the implications for the area of the commissioners' responsibility of the Education Reform Bill.

Mr. Michael Alison (Second Church Estates Commissioner, representing Church Commissioners): The commissioners' involvement in the educational field is restricted to providing grants towards the stipends of chaplains in universities and polytechnics. They have received no representations on this matter.

Mr. Marshall: Does my right hon. Friend agree that the popularity of denominational schools underlines the desire of parents for religious education based upon the scriptures? Does he also agree that religious education should be taught by those with a sense of conviction, and is he happy with the role of religious education, in the Education Reform Bill?

Mr. Alison: I am delighted that the Education Reform Bill retains the compulsory provision of the 1944 Act for religious education and introduces a new complaints procedure in relation to the supervision of that instructuon. I agree with my hon. Friend that, almost universally, parents want religious education and they want it to be predominantly Christian and scriptural. I note that there will be an opportunity to debate these matters in the course of the next two or three days.

VAT (Religious Books)

Mr. Allen: To ask the right hon. Member for Selby, answering for the Church Commissioners, what representations he has received from the clergy regarding the implications for their standard of living of taxation on religious books.

Mr. Alison: The Church Commissioners have received no such representations. Parochial church councils are encouraged to reimburse a clergyman for the cost of books considered necessary to assist him in his ministry. Failing this, the Inland Revenue allows tax relief on certain categories of books. The imposition of VAT on books would have a significant effect on clergy, who, by the nature of their work, spend quite a lot on books.

Mr. Allen: I am grateful to the right hon. Gentleman for his reply. Is he aware that the European Community is still determined to impose VAT on books, and that this will not only be a tax on learning but in this instance a tax on religion as well? That will affect not only the members of the Church of England for whom the right hon. Gentleman answers, but Catholics, Muslims, Hindus and all the other religious denominations which he does not represent. Will he make representations to his hon. Friends to ensure that VAT is not imposed on religious books?

Mr. Alison: I note that a Treasury Minister in a written answer on 18 January stated that my right hon. Friend the

Prime Minister has already made it clear that the United Kingdom will not accept proposals which restrict our right to apply zero rating.

Mr. Gow: Is not my right hon. Friend vigorous in his defence of the rights of the Chancellor of the Exchequer and of this House to determine taxation? Is not his reluctance to allow Lord Cockfield to impose taxation upon religious books just as robust as that of the Prime Minister?

Mr. Alison: I am not quite sure that I can reach Lord Cockfield with quite as ready accessibility as I can reach my right hon. Friend the Prime Minister.

Oral Answers to Questions — PUBLIC ACCOUNTS COMMISSION

Public Accounts Committee

Mr. Allen: To ask the Chairman of the Public Accounts Commission if he will give details of the occasions since 1986 when the Public Accounts Commission has received advice from the Public Accounts Committee under section 4(2) and (3) of the National Audit Act 1983.

Sir Peter Hordern (on behalf of the Public Accounts Commission): The Public Accounts Commission considered and approved the National Audit Office's proposed Estimates for the financial years 1987–88 and 1988–89 at its meetings on 3 February 1987 and 15 December 1987 respectively. Before approving the Estimates the Commission had regard to the advice of the Public Accounts Committee as it is obliged to do.

Mr. Allen: Has the Public Accounts Committee advised the Commission on the number of National Audit Office reports issued to Parliament? Will the hon. Gentleman also give us his own view on whether enough time is allowed on the Floor of the House for these very important reports to be debated for the benefit of hon. Members on both sides of the House?

Sir Peter Hordern: Yes, Sir. We understand from the Public Accounts Committee that the National Audit Office is expecting to produce 50 reports a year by 1992–93, which is a significant increase.
As to the second part of the hon. Gentleman's question, much as I should like to give my personal view, I am happy to say that my right hon. Friend the Leader of the House is a member of the Commission and no doubt heard what the hon. Gentleman had to say.

Mr. Latham: Will my hon. Friend confirm that one of the matters on which the PAC has given such advice— he was involved in this — was the need for a decent salary for the Comptroller and Auditor General for Northern Ireland? In view of the serious staffing difficulties in that regard, is he pressing Ministers to ensure that the matter is soon resolved?

Sir Peter Hordern: I can tell my hon. Friend that one of the matters that the PAC is considering at present is the salary of the Comptroller and Auditor General for Northern Ireland.

Oral Answers to Questions — WALES

Health Authorities (Financial Deficits)

Mr. Win Griffiths: To ask the Secretary of State for Wales if he has any proposals to help Welsh health authorities overcome their financial deficits.

The Parliamentary Under-Secretary of State for Wales (Mr. Ian Grist): This year supplementary revenue funding amounting to £23·3 million has been provided to district health authorities in Wales to help them meet financial pressures. This brings the cash increase in DHA revenue funding to £60·5 million, or 9·1 per cent., over the 1986–87 provision. Loans of £2·3 million have also been provided to the two authorities with cash flow problems.

Mr. Griffiths: Does the Minister agree that the situation for all health authorities in Wales is extremely serious? Is he aware that, as we approach the new financial year, Mid-Glamorgan area health authority already knows that, unless the Government fund in full the nurses' pay award, it will be £5 million short in the coming year? Does the Minister agree that most of the deficit finance problems of the Health Service in Wales are due to the Government's previous failure to fund properly the pay awards to the nurses?

Mr. Grist: The hon. Gentleman will remember that last year some 97 per cent. of the cost of the review body awards were funded by central Government and were, therefore, not met from health authority budgets. If Mid-Glamorgan area health authority had put into operation cost savings and tendering programmes, as it was urged to do, it would not be in this position.

Mr. Raffan: How much less would be spent on the NHS in Wales if expenditure had remained at the 1979 percentage of gross domestic product, namely, 4·7 per cent. and not risen to today's level of 5·4 per cent. of GDP? The expenditure on the NHS in England and Wales is £2·9 billion. Will my hon. Friend tell us what the figure is for Wales alone?

Mr. Grist: Since the rise is about 35 per cent. in real terms I shall leave my hon. Friend to work out the mathematics of that one.

Labour Statistics

Mr. Barry Jones: To ask the Secretary of State for Wales how many people were out of work in May 1979 and on the latest available date in (a) Clwyd and (b) Wales; and what increases these are in percentage terms.

The Secretary of State for Wales (Mr. Peter Walker): On II February 1988 the number of unemployed claimants in Clwyd was 19,024. Unadjusted figures for 1979 are not available on a basis that enables a valid comparison to be made.
The seasonally adjusted numbers of unemployed claimants in Wales in May 1979 and February 1988 were 73,100 and 136,700 respectively. I am pleased to say the latest figure shows a decrease of 23 per cent. over the past months.

Mr. Barry Jones: May I remind the right hon. Gentleman that later this week he will meet Clwyd county council? Will he give sympathetic consideration to the case that the council will make to build a new crossing of the

River Dee? Does the right hon. Gentleman understand that, if he gives such sympathetic consideration many new jobs will be developed in an area where there is still mass unemployment?

Mr. Walker: I gather that it is a local authority scheme and I shall, of course, listen with interest to what the authority has to say.

Oral Answers to Questions — HOUSE OF COMMONS

Annunciators

Mr. Thurnham: To ask the Lord President of the Council if he will make a statement on announcements about Government business on the House of Commons annunciators.

The Lord President of the Council and Leader of the House of Commons (Mr. John Wakeham): On Mondays to Thursdays the House of Commons annunciators display continuously, from fpm until the House convenes, any private notice questions and statements that are due to be taken at the commencement of public business. On Fridays any such announcement is usually shown first at 10 am and then at regular 15-minute intervals for a two-minute period until the statement is made.

Mr. Thurnham: I would be pleased if consideration could be given to keeping information about statements on the annunciators after 2.30 pm. Can my right hon. Friend say when he expects us to see that?

Mr. Wakeham: I hope my hon. Friend will recognise that there are physical limits to what can be done. However, it may be possible to accommodate the words, "Statement at 3.30 pm" or "Private notice question at 3.30 pm" on the top of the screen. In view of my hon. Friend's request I have referred this matter to the Accommodation and Administration Sub-Committee for further consideration.

Mr. Tony Banks: While I would not necessarily want to hear every speech made in this Chamber if I were not present, is it not now technically possible to use the annunciator system to take a sound feed so that Members in their offices can listen to debates? When the Select Committee considers the televising of Parliament, could it consider the possibility of having pictures as well as sound on the annunciators?

Mr. Wakeham: I imagine that both those things would be possible, but they would require further consideration and decision by the House. I shall bear the hon. Gentleman's points in mind.

Mr. Sims: I appreciate that there are time restrictions with regard to private notice questions, but it is often the case that the Government know that a statement will be made, possibly even a day or so beforehand, yet no notice appears until 1 o'clock. Therefore, those hon. Members with lunch engagements go to those engagements without being aware that a statement is to be made. Is there any reason why, for example, the fact that there was to be a statement made today could not have been on the annunciator during the course of the morning?

Mr. Wakeham: First, there are questions regarding seeking Mr. Speaker's permission to make a statement and


so on, but I will bear what my hon. Friend has said in mind. However, I believe that the present arrangements are the most satisfactory.

Still and Carbonated Waters

Mr. Harry Greenway: To ask the Lord President of the Council what quantity of still and carbonated waters were sold in the House of Commons Refreshment Department in the last year; from what countries; and if he will make a statement.

Mr. Charles Irving (Chairman of the Catering Sub-Committee): I have been asked to reply.
In the year ending February 1988, 34,000 bottles of still and carbonated spring and mineral waters were sold by the Refreshment Department. Of those, 10,300 pints were British and 13,700 pints were French. The Catering Sub-Committee has recently decided to promote the sale of British waters by selecting waters from England, Scotland and Wales that will bear the House of Commons own label. It is hoped that those waters will be available for sale after the Easter recess, and we shall also be selling them in the Kiosk, thereby doubling the amount that we sell each year and making an increased profit.

Mr. Greenway: I thank my hon. Friend for that reply. May I remind him that he, the right hon. Member for Morley and Leeds South (M r. Rees) and I were members of the Sub-Committee that chose the excellent English, Scottish and Welsh waters that the House has so enjoyed? Has the time not come to eliminate French waters from this House?

Mr. Irving: We do not intend to eliminate Perrier water. That would be totally undemocratic and it would be very much more difficult to obtain.

Mr. Haynes: I am ashamed and disgusted that we carry foreign waters in this place. What about fighting for Britain? What about the British waters? It is high time that the policy was changed.

Mr. Irving: In reply to the hon. Gentleman, I can state that that is exactly what we are doing, and I am grateful to him for the compliment.

Welsh Language

Mr. Butler: To ask the Lord President of the Council what assessment he has made of the cost of using simultaneous translation facilities in the Welsh Grand Committee so as to allow for the use of Welsh in its proceedings.

Mr. Wakeham: None, Sir. It is a rule of the House that all proceedings should be conducted in English.

Mr. Butler: My right hon. Friend will be aware of the divisiveness that the Welsh language can and does cause in the Principality. Would this not be an inexpensive investment in confirming the unity of the United Kingdom?

Mr. Wakeham: That is a matter for the House, not for me. However, I very much doubt whether it would he approved by the House.

Mr. Ieuan Wyn Jones: Bearing in mind that this year we are celebrating the 400th anniversary of the translation

of the Bible into Welsh and the fact that more than one-third of hon. Members from Wales now speak Welsh, does the right hon. Gentleman not believe that this year would be the appropriate time to introduce Welsh into the proceedings of the House?

Mr. Wakeham: No. The proceedings of the House have been conducted in English for many hundreds of years and I believe that that policy should continue.

Mr. Nicholas Bennett: In view of the large number of English Members who signed the early-day motion on this subject, will my right hon. Friend arrange for them to have Welsh lessons?

Mr. Wakeham: That is not a matter for me.

Mr. Coleman: Will the Lord President of the Council resist this proposition? Is he aware that the proceedings of the Welsh Grand Committee are broadcast? Therefore, many of our countrymen who do not speak the language would be deprived of hearing the speeches made by Welsh Members if those speeches were made in Welsh.

Mr. Wakeham: The hon. Gentleman speaks with great experience. The rule regarding the use of the English language extends to the Committees of the House. I understand that on two occasions, once in the Select Committee on Welsh Affairs and once in the Select Committee on Foreign Affairs, a language other than English was used by a witness giving evidence. However, an interpreter was present and the records of the meetings were produced only in English.

Mr. Forth: Does my right hon. Friend accept that the four-fifths of people in Wales who do not speak Welsh will be grateful to him for his sensible decision? Does he also accept that if he were to give way to this unreasonable request, groups speaking many other languages in the United Kingdom—and some groups may be as large as the Welsh-speaking group — would want to make a similar claim on the House?

Mr. Wakeham: As usual, my hon. Friend has widened the subject very well. He has made a very good point and I will take note of it.

Aerosols

Mr. Allan Roberts: To ask the Lord President of the Council if there are any plans to ban the use of aerosols in the Palace of Westminster; and if he will make a statement.

Mr. Wakeham: No, Sir. I am not aware of any such plans.

Mr. Roberts: Does the Minister not realise that Prince Charles has already banned the use of dangerous aerosols——

Mr. Speaker: Yes, but we must not bring in the private opinions of members of the royal family to support arguments.

Mr. Roberts: It is a stated public opinion of the royal family that the aerosols are dangerous and the royal family are not using them in their homes. Prince Charles made his statement as an environmentalist who is concerned about the environment. In the light of recent reports that there has been a 3 per cent. depletion of the protective ozone layer over Britain, and that every 1 per cent. by which that


ozone layer is depleted causes the incidence of skin cancer to increase between 5 and 7 per cent., should not the Government take the issue seriously, set an example and ban the use of CFC-bearing aerosol cans in the Palace of Westminster and in all Government Departments, especially the Department of the Environment?

Mr. Wakeham: I am sure that the hon. Gentleman realises that not all aerosols are subject to this restriction. The restriction applies only to those aerosols which contain chlorofluorocarbons. I am sure the hon. Gentleman is aware that by signing the Montreal protocol the Government are committed to reducing the use of those chemicals in this country by 50 per cent. before the end of the century. We are looking to all users in refrigeration, insulation and dry cleaning—as well as aerosols—to contribute towards that reduction. To that

end the Government are adopting a more far-reaching and co-ordinated policy that will produce greater environmental benefits.

Mr. Dickens: Is the Lord President of the Council aware that if aerosol sprays are banned from the Palace of Westminister hon. Members run the risk of becoming extinct? A lot of hot air is spoken here late at night.

Mr. Wakeham: Any such ban would ultimately be for the House to decide. While I would not discourage any decision by individual Members or Officers of the House not to use aerosols containing chlorofluorocarbons, it would not be appropriate to ban their use. Voluntary action is likely to be more effective, and the British aerosol industry, which has already made a significant contribution to reducing emissions, expects virtually to phase out the use of CFCs within the next few years.

Terrorist Murders in Northern Ireland

The Secretary of State for Northern Ireland (Mr. Tom King): With permission, Mr. Speaker, I wish to make a statement on the recent killings in Northern Ireland, and especially on the murders of two soldiers in Belfast on Saturday 19 March.
I must remind the House of the background and sequence of events during the last week in Northern Ireland. On Wednesday the funerals were held of the three IRA terrorists killed in Gibraltar. In spite of the very large crowds and the extremely tense situation in West Belfast, the funerals had proceeded in an orderly manner, without violence and without any paramilitary display.

Mr. Ken Maginnis: On a point of order, Mr. Speaker.

Mr. Speaker: Order. This may be a point of disagreement. I shall call the hon. Gentleman in due course.

Mr. King: This was the position when a vicious attack took place at Milltown cemetery by a Loyalist gunman. In that attack three people attending the funeral were killed and a large number injured, of whom one remains in intensive care.
On Thursday there was the funeral of the IRA gunman shot by the Army on Monday. He was acknowledged by the IRA as one of its members. His funeral took place without disturbance and without paramilitary display.
On Friday the funeral took place of Charles McCrillen, a Catholic with no paramilitary connections, shot by the UFF; and of Thomas McErlean, one of the three killed at Milltown cemetery. These again took place peacefully and without any breach of the law.
On Saturday the funerals of the other two killed at Milltown cemetery took place, first that of John Murray, and secondly that of Kevin Brady, who was acknowledged by the PIRA to be one of its members. It was at this funeral that the quite horrific events took place that have so shocked the world.
I would like to tell the House the facts as far as they can be established about these events. Just after midday on Saturday, following the funeral service at St. Agnes church, the cortege moved off along Andersonstown road towards the Milltown cemetery. At that point, a civilian car attempted to reverse away from the cortege. Despite the television coverage of the subsequent events, which many hon. Members will have seen, it remains unclear how the car came to be in that position and for how long it had been on that road. What is quite clear, however, is that as it reversed away from the cortege its way was blocked, both forward and backward, by taxis accompanying the funeral.
What immediately followed is a matter of sickening visual record. A number of those in the funeral cortege immediately set upon the car with the obvious intention of pulling out the two occupants. Photographs indicate that at this point the driver of the car leaned out of his window and fired one shot in the air—the only shot which both occupants tired in the course of the attack upon them. After only a moment's pause the crown resumed the onslaught on the car, some of them smashing at it with iron bars, and eventually succeeded in hauling

out both occupants. Both men were then dragged by the crowd into an adjacent stadium, the gates were closed, and it appears that a smaller group of attackers continued to assault them, stripped them and searched their clothing, subsequently threw them over a wall, and then bundled them into a black taxi which took them to a nearby piece of wasteland, where they were shot.
It subsequently emerged that the two victims were corporals in the Royal Corps of Signals— Corporal Wood and Corporal Howes. Shortly beforehand they had left the joint police and Army base in North Howard street mill, after completing a routine maintenance task, in order to return to their unit at Lisburn. They had no reason to be in the vicinity of the funeral. This is not an approved route for soldiers who are not on operational duty at the time, and there is absolutely no question of their being involved in any way with surveillance or any other duties connected with the funeral. I am therefore unable to tell the House with any certainty why they were there. If the most likely explanation is that they decided to take the shortest route back to their base, without appreciating the presence of the funeral, this can only be conjecture, and it will probably never be known why they were there.
Whatever the reason, however, nothing can conceivably justify the utterly appalling outrage that then occurred and which resulted in their deaths. The whole House will join me in extending the utmost sympathy to their families, and even more so in view of the awful television pictures of the occasion. Nor has it gone unnoticed, and rightly so, that, although they both had loaded personal protection pistols, they showed incredible restraint in using them only to fire a warning shot in the air.
In the face of this outrage, and the others in the week, the first and immediate objective is to bring to justice those responsible. In respect of the Milltown cemetery attack, a man will shortly be charged with these murders, and also a number of other serious offences. In respect of the killing of the soldiers, two men are already in custody. In addition, a massive murder investigation is under way, in which all possible resources are involved to identify all those responsible.
The next issue that I wish to address is that of the approach of the RUC to the conduct of these funerals. Large funerals and processions are arguably the most difficult events from a public order and a terrorist threat situation that the security forces face. They have been used quite unscrupulously by paramilitaries for propaganda purposes.
The Chief Constable, in determining the most appropriate method of policing any funeral, takes account of all the relevant circumstances in reaching his decision. Clearly a prime consideration has been that they should be conducted within the law and without paramilitary display. He would also have regard to the degree to which other elements would seek deliberately to exploit the presence of the police to provoke violence and disorder.
There have been suggestions that the arrangements for the funerals were the consequence of a political directive and that there had been some interference with the independent operational responsibility of the Chief Constable. This is quite false. The Chief Constable has asked me to make it quite clear that he takes full responsibility for the arrangements for the funerals, and that these were policing decisions, taken after the most careful assessment of all the relevant circumstances. I


would emphasise that I fully support the decisions that he took in these matters, and in which the initial outcome had clearly been successful. However, the two incidents that subsequently occurred are clearly wholly unacceptable and require immediate review in regard to policing to be followed at any future funeral. The Chief Constable has informed me this morning that he is carrying this through as a matter of urgency. I can tell the House that he will carry through this work with great professionalism and sensitivity, but the House knows well how difficult it is to ensure that funerals can proceed in good order and within the law when there are elements who have absolutely no scruples or respect for family feelings in the way in which they seek to exploit them.
Faced with the appalling violence of the last weeks—not only in Belfast, but the vicious murders of Jillian Johnston in Fermanagh and Constable Graham in the Creggan in Londonderry only this morning—the House may remember the words that I spoke last Thursday about the desperate need to break the awful cycle of violence and retaliation and end the suffering and heartache that is achieving nothing but more misery for all. This is now urgent, and it is the time when every person with a spark of human decency must determine to give his full support to the fight against terrorism, from whichever quarter it may come. The security forces will take the lead, as they have done so bravely over the years, but they must have the whole-hearted co-operation of everybody in the Province, in the island of Ireland and throughout the United Kingdom, in their task. I saw this morning Archbishop Eames, Cardinal O'Fiaich, the Moderator and Secretary of the Presbyterian Church and the President of the Methodist Church, on the need for all in the Province to take their share of responsibility and to condemn violence in all its forms.
It is vital that we also help the community, in any way, to support the fight against terrorism, and in that connection we are improving significantly the confidential telephone system. Very shortly indeed we shall be supplementing the present system with a single and easily memorable freephone number usable right across the Province. I have asked the broadcasting authorities to publicise the number, and they have readily agreed. That will be a valuable strengthening of the present facility, which is, in fact, being used by a considerable number of people in their horror at the events of Saturday.
The fight against Republican terrorism must be waged also beyond the confines of Northern Ireland, and it particularly raises major challenges for the Government of the Republic of Ireland. A significant number of steps have been taken to help improve cross-border cooperation, and we particularly appreciate the amount of weapons and explosives that have already been recovered by the Garda. We have to keep working to improve that co-operation in our common interest to defeat terrorism. I have this morning agreed with Mr. Lenihan that there will be a meeting of the Intergovernmental Conference this week, at which we shall be discussing cross-border security co-operation, and which will be attended by Mr. Lenihan and myself, as co-chairmen, by Mr. Collins, the Irish Minister of Justice, by my right hon. Friend the Minister of State and by the Chief Constable and the Commissioner of the Garda.
The common phrase this weekend is that the troubles of Northern Ireland have plumbed new depths of horror. That was the phrase at Enniskillen, that was the phrase at Milltown cemetery, and it is now the phrase in the Andersontown road following the events of Saturday. The truth is that there will be new depths again so long as this awful and violent campaign of terrorism and revenge continues. It has got to stop, in the name of humanity, if there is to be any decent future for the people of Northern Ireland and for all those living in the island of Ireland, and if the evil shroud of terrorism is to be lifted from the United Kingdom as a whole.
We all have our part to play, whether in actively combating terrorism through the security forces, whether working to build bridges across communities or whether in deciding we do nothing in our words or actions that can increase the tensions. We all have our part, and the duty that we owe to all the tragic victims of these outrages is to play that part to the full.

Mr. Kevin McNamara: It is my unhappy duty once again to have to pass on the condolences of Opposition Members to the families of those who have been so tragically killed in Northern Ireland. Our sympathies today are with the families of Corporals David Howes and Derek Wood, but we must not forget Jillian Johnston, and we hope that her fiance will have a speedy recovery. Our condolences must go also to the family of Constable Graham, who was killed in the Creggan.
In the past four days the Secretary of State has twice had the melancholy task of coming to the Dispatch Box as the bearer of bad news. Five tragic deaths have occurred at funerals, three at the hands of a maverick gunman, and two after being cornered by a bestial pack that had trapped its quarry.
However, the important thing is that in this House we maintain cool heads. Our justified and righteous anger should not be allowed to overcome a reasoned judgment, for if it does the men of violence will have won.
On Thursday Opposition Members supported the decision of the Chief Constable in the attitude that was taken to the policing of Wednesday's funerals. He took a similar decision on Saturday, and in the successful funerals that occurred earlier last week, which we tend to forget. We thought that he was right then; we think that he is right now. He must decide how best to police events in emotionally charged atmospheres. That is sensitive policing, not soft policing. He must take each case as it comes, on its merits. We welcome his review, but we welcome also the knowledge of his integrity and of the fact that he will do what is best for the rule of law and for the feelings of the families of the dead in Northern Ireland when he comes to his decision.
None the less, questions need to be asked and observations need to be made. First, is the Secretary of State in a position to tell the House if, and when, the Army was informed by the Royal Ulster Constabulary of the type of policing practices that were to be used at the funeral on Saturday, and indeed at previous ones? What general procedures for liaison between Army personnel and the RUC exist on these matters?
Secondly, can the Secretary of State confirm that instructions were given to the two corporals about the route to be followed and that they had been briefed about the funerals?
Thirdly, we welcome the statement that a man is to be charged for what happened at Milltown and that two people have been arrested in connection with what happened on Saturday, but many more people were involved in the soldiers' murders. Can the Secretary of State say whether it has been decided to bring charges against the two who have been arrested and if he expects further arrests to follow?
Fourthly, it has been alleged that the security forces in the area were prevented by orders from seeking to protect the soldiers, the mere suggestion of which I find completely reprehensible. Will the Secretary of State confirm to hon. Members, who may have heard other hon. Members making that statement, that such was not the case?
Finally, in terms of questions, can the Secretary of State say what role the helicopter that was in the vicinity played in seeking to summon assistance to the cornered soldiers?
We welcome the Secretary of State's statement about the Intergovernmental Conference to be held later this week. Obviously, Opposition Members welcome the continuance of that development. We prefer it to suggestions in some quarters that there should be an early meeting between the right hon. Lady the Prime Minister and the Taoiseach. Our general view is that, while we welcome the support and statements that are coming from the Republic in the wake of recent incidents, gesture politics of a summit nature would not be proper at the present time. Perhaps there should be a summit meeting, but it should take place only after a period of careful planning, with an agreed agenda, and when each of the Governments know what they want to achieve. At present, the mechanics exist in the Intergovernmental Conference for other matters to be discussed.
We believe that the Prime Minister should start once again to play a more active part in Irish affairs. In the past six months horrific events and political misunderstandings have increased. As a signatory to the Anglo-Irish Agreement, many of us believe that the Prime Minister should resume that keen interest which helped to lead to the signing of the agreement. This will be essential in the period leading up to the re-examination of the Anglo-Irish Agreement.
There is a responsibility on the elected leaders of the communities in Northern Ireland, who have seen enormous tragic changes taking place in their communities. They must come together. They must sit together, with good will and no preconditions, to attempt to find a peaceful way forward. The vacuum in constitutional politics has for the moment been replaced with a surfeit of violence—the gunman, the bomber, the lynch mob. It is time for the political leaders from both communities in Northern Ireland to find an antidote to this poison in the midst of the communities.
All that the British Government can do, and all that we as an Opposition can help them to do, is to maintain the position in which the political leaders can come together to talk. The Secretary of State has a crucial role to play in this process. We are talking about British subjects directly ruled from this House. If that is his course of action, I am sure that he will be given the full support of all men and women of good will in both these islands. He will have our support in upholding the rule of law against the law of the jungle.

Mr. King: I am grateful to the hon. Gentleman for his closing comments and for the way in which he has

approached this appalling and difficult issue. He said that he supported the decision as being right at the time, but clearly in the light of subsequent events it requires close review. That will he done. There is close liaison between the Army and the police. In all their activities they work in close co-operation.
In terms of what the soldiers knew, I understand that there was a general briefing at the beginning of the week about the problems posed by the tensions arising from the funerals. As I said in my statement, the route that the soldiers were on is not an approved route at any time for soldiers who are not on operational duties in the area.
I cannot add to what I said about charges, but obviously the House will await further information with close attention.
There is absolutely no truth whatever in the suggestion that the security forces were in some way prevented from intervening. That is a gross calumny on the operational independence of the Chief Constable and the integrity of the senior officers at the time. There is no justification whatever for that claim and I am sorry that certain people have chosen to raise that point.
At the time, the police were obviously assisted by the helicopter. It is no secret that it can provide helpful information of events on the ground, although sometimes it takes time to interpret exactly what is happening. The police did not have access to the sort of television film inside the cameras which subsequently we have all been able to see and with hindsight form other views. In the initial stages it took time to clarify what was taking place. The police knew that there were certainly no security forces or soldiers in the area. As far as their intelligence went, nobody was there. It is no secret that the first impression was of a further attempted bomb attack on a funeral. That was one possibility. As soon as it was clear that the matter was indeed serious, the police acted with considerable determination.

Mr. James Molyneaux: In fairness to the two young corporals, will the Secretary of State accept that he seemed to say by implication that the route they chose was the direct route to Army headquarters in Lisburn? Will he confirm that the alternative route, which is an extension of the M1 motorway, has been a no-go area to all Army personnel for years? Were the two corporals informed that the motorway extension was out of bounds to them? Were they directed to use a route which had not previously been authorised for military personnel?
Can the Secretary of State now answer the question that I put to him in the House last Thursday, when I asked him to explain precisely how the stand-off decision was taken and what wider considerations and discussions preceded the Chief Constable's directive? Does he agree that dual control of the security forces, the Army and the RUC, as required by article 7 of the Anglo-Irish Agreement, is proving to be utterly disastrous?

Mr. King: I note that the right hon. Gentleman does not choose to repeat in the House the allegations that he made outside about some political interference. I am glad that he did not, because they happen to be absolutely untrue.

Mr. Molyneaux: rose——

Mr. Speaker: Order. We cannot have interventions in the middle of answers.

Mr. King: If the right hon. Gentleman intends to quote from the Anglo-Irish Agreement, it would be more candid


with the House to recognise that the Anglo-Irish Agreement specifically reserves the operational independence of the Chief Constable. The Chief Constable has made his position clear. What has happened is deeply regrettable. The right hon. Gentleman opened his question out of deference to the two corporals concerned. We feel that deference throughout the House. The right hon. Gentleman does no good to misrepresent the position about the sad circumstances that surrounded their deaths.
In my statement I made clear the position about the road. It is not a no-go area. There are no no-go areas in Northern Ireland. There is a difference between routes that soldiers or security forces use when on operational duty, and those that they use when they are not on operational duty.

Sir Bernard Braine: Whatever our private feelings about the atrocious happening on Saturday, I am sure that all of us welcome my right hon. Friend's frank, moving and firm statement. With regard to the future, will he take it from me that hon. Members and the country cannot accept any suggestion of no-go areas in any part of the United Kingdom? I hope that he will make that absolutely clear. Although we expect the Government to continue to seek reconciliation between two sorely tried communities by every reasonable means, they must not flinch from the task of eradicating men of violence, wherever they may be found.

Mr. King: I appreciate my right hon. Friend's comments. This has been a tragic and most awful occurrence. Whatever the circumstances in which it arose, it is simply intolerable that this could happen, not just in the United Kingdom, but anywhere in the civilised world. I do not think that I was the only person who sensed the utter barbarity that happened on Saturday. Against that background, I assure my right hon. Friend that there are no no-go areas. The writ runs throughout Northern Ireland, as it does throughout the United Kingdom, but I draw the distinction, which right hon. and hon. Members will recognise, between routes where there are no no-go areas and routes that are more sensible, or less sensible, to use when not on operational duty.

Mr. John Hume: I join the Secretary of State and right hon. and hon. Members in expressing the deepest sympathy to the families of those who have been murdered in the past week in Northern Ireland and in sending a particular word of sympathy to the families of the soldiers who were murdered in such barbaric circumstances. The dictionary is no longer full enough of words to express proper condemnation and the revulsion that people feel about what happened. I agree with the Secretary of State. There is no shortage of those who, in hindsight, would tell us what we should have done.
I tell the House with conviction that the feeling in west Belfast last week after the Gibraltar incident was such that had the security forces mounted normal operations at these funerals the violence would have been serious and there would have been many more deaths. Unfortunately, political leaders, policemen and soldiers in Northern Ireland are faced, not with the normal choice between what is right and what is wrong—not with black and white—but often with the choice between the roads of lesser risk and lesser evil. In the circumstances, the police

and the Army took the proper and correct decision, and I support them. These events have underlined for everybody across the board in Northern Ireland the desperate and terrible futility of killing human beings in order to unite a people.
What that deep feeling, right across our community, cries out to everybody in this House, and particularly to me and the hon. Gentlemen who sit behind me, is that there is a desperate need for dialogue, not to conquer one another, but to accommodate our differences. —[Interruption.] I also say to those who criticise and say that because of these horrific events the Government should be deflected from the road on which they have chosen to go, together with the Irish Government, that they are saying that both Governments should be blackmailed by the people who committed these horrific crimes, and that is unthinkable. —[Interruption.] Strength must be shown, and there is no better way to show that to the people of Northern Ireland than by the two Governments, with all their resources, working as closely as possible to face down and tackle all these problems.

Mr. King: I am grateful for the hon. Gentleman's opening comments, which drew attention to the appallingly difficult decisions that the Chief Constable, who has the responsibility, has to take. It is easy enough to shout abuse, and the House heard an illustration of that during the hon. Gentleman's contribution, with the shouting and the heckling that will always come from one side or the other. There is plenty of abuse that can be shouted. The problem is how to take decisions in the best interests of the people.
I was particularly concerned about the contribution of the right hon. Member for Lagan Valley (Mr. Molyneaux), because he has a part to play in leading. He is looked to for leadership, and I hope that he will be able, as I hope that the hon. Member for Foyle (Mr. Hume) will, to show total support, in the fight against the violence, for the efforts of the security forces, and in the total commitment of both the Unionist and Nationalist constitutional parties to realise that they owe it to their people to encourage dialogue and discussion and not to leave a vacuum in which violence breeds.

Mr. Peter Robinson: I join the Secretary of State, not only in his condemnation of the killings that he had to report to the House, but in his expression of sympathy to the families of those involved.
Is it the Secretary of State's view that some contribution to the fact that the two soldiers were killed was that they restrained themselves and did not open fire? Is any part of that due to the fact that soldiers, and the security forces in general, are concerned at the repercussions should they attempt to defend their lives or those of other people in the community, because there may be calls for inquiries, disciplinary charges and even court cases? Will the right hon. Gentleman make it clear that he will stand behind any member of the security forces who has to defend his life in such circumstances?
What contribution does the hon. Gentleman feel that the decision of the Chief Constable to abdicate policing of west Belfast played in the events of Saturday? Will he be pressing the Chief Constable, in his review of policing funeral arrangements, to ensure that if those circumstances should recur there will be taken into consideration


the fact that the IRA takes over the policing of an area if the RUC abdicates that role? It is not simply a case of there being no policing in the area.
Does the Secretary of State feel that the vacuum into which undoubtedly violence and terrorism go can be taken up by political movement in Northern Ireland to get a replacement for a system that has failed not only politicians but the people of Northern Ireland? Can we not move towards a system of government that can produce peace, stability and reconciliation in Northern Ireland, and does he not think that with that stable structure of government we might have a firm and resolute security initiative to defeat terrorism in our Province?

Mr. King: It is right that the soldiers concerned had an absolute right to defend themselves. The terms of engagement are to save their own or other people's lives. At the same time, we must. recognise the appallingly difficult situation that they were in and the incredible restraint that they showed in the circumstances, to their tragic cost. They would have been entitled to defend themselves.
In no sense do I accept the phrase that the Chief Constable "abdicated policing" in west Belfast. I do not know why we assume that funerals ought to be policed. Should we not expect funerals to be one occasion when there is no need for policing? The appalling and unscrupulous intentions of those who exploit the grief of funerals has in the past made the policing of funerals necessary. There is no question of abdicating policing. Moreover, there is no question of tolerating any suggestion that the IRA, Sinn Fein or anybody else will set up some alternative police force.
Whereas the first funeral was clearly conducted in good order and without display, there were discouraging signs by the time of the funeral on Saturday. Although, as far as we know, there was no firing party, there were signs of some attempts to push the boundary back towards paramilitary displays, and I know that the Chief Constable is concerned about that.
If I read the hon. Gentleman right, I welcome the last part of his contribution, which was in line with other contributions that have been made. It is by dialogue, discussion and a constitutional approach, and not by violence, that we shall find the right way forward.

Mr. David Alton: In associating myself and my right hon. and hon. Friends with the condolences that the Secretary of State has expressed, I assure him of our full support for him personally in circumstances which have required great fortitude, courage and resilience. We strongly believe that the ritualistic calls for his resignation and that of the Chief Constable are gratuitously offensive, and should be treated as such. We reiterate our support for the Anglo-Irish Agreement as the best tool for defeating the lynch mobs. We welcome the announcement of the Intergovernmental Conference, and we hope that there will be an early summit at which the Prime Minister and the Taoiseach will meet. We hope that on the agenda on that occasion will be the question of a joint security commission.
Will the Secretary of State review the policy of letting soldiers on duty drive through the Province in unmarked cars while wearing civilian clothing and armed only with pistols? Is it not the case that the only crumbs of comfort

to be drawn from a week of funerals, with yet more to come, is that the IRA has been exposed at its most bestial, ruthless and violent, and that no Irishman or Briton who calls himself civilised or Christian can give succour, hiding place or even acquiescence to the IRA or other paramilitary organisations?

Mr. King: I apologise for the fact that I have not yet replied to the question about a summit, which was raised also by the hon. Member for Kingston upon Hull, North (Mr. McNamara). As I announced, I and the Tanaiste, the Deputy Prime Minister, are to have a meeting this week. Any question of a meeting between my right hon. Friend the Prime Minister and the Taoiseach will be a matter for later consideration, but there are no present proposals.
As to the question of the rules about soldiers travelling around the Province in unmarked cars while wearing civilian clothes, where there are major troop movements there is no question of that happening. However, in terms of administration and maintenance tasks — I see the right hon. Member for Morley and Leeds, South (Mr. Rees) nodding in agreement—the best way to safeguard the lives of soldiers, without massive organisation, is a degree of anonymity. Provided that the normal arrangements are adhered to, and sensible precautions are taken, it has worked extremely well in the past.
I appreciate the hon. Gentleman's comments about me. I agree about the bestiality of what took place. I hope that everybody knows that what they saw are the people who, with the Armalite and the ballot box, have used the phrase, "Who shall object if we take power in Ireland?" Not just north of the border, but throughout the island of Ireland, through the medium of television, people saw the sorts of people who want to take power over them. It was no coincidence or impulse that made those people rush towards the cameras to try to obliterate the shots. Whatever the tragedy and awfulness of this, it has revealed the IRA in its real, unspeakable nastiness. Those pictures will not be forgotten in the island of Ireland.

Mr. Cranley Onslow: In expressing the full support of Conservative Members and the House as a whole for my right hon. Friend in his enormously difficult task, may I put it to him that, although it is almost impossible to find adequate words to describe the ghastly tragedies of last week, one thing that stands out is the heroic restraint of the murdered soldiers in not using their weapons to defend themselves against their brutal attackers? We should all pay tribute to them for that and remember them with honour. It should be a memorial and an example to everyone in Ireland.

Mr. King: We all feel deeply humbled at the way in which those soldiers reacted with discipline and restraint in the circumstances. It may interest the House to know that the GOC told me last night that the Army has never received as many messages of sympathy, concern and respect from members of the public across the Province as have been flooding into Army headquarters in Lisburn, where the two soldiers were based.

Mr. Ken Maginnis: First, I join other right hon. and hon. Members in expressing my sympathy and the sympathy of my constituents to the families of the two young soldiers. My constituents know from bitter experience how the families and comrades of those two soldiers feel. Only the evening


before the death of the two soldiers, which was seen so vividly on television, an unsuspecting young girl of 21 was gunned down, by 47 shots from high-powered weapons, in the yard of her own home. She was the 196th victim of terrorism in my constituency, and the 111th victim since a date exactly 12 years ago. Of those 111 people, 110 were victims of the IRA.
We have heard people talk, because they saw it on their television screens, about the unbelievable savagery of what happened on Saturday. I and those whom I represent live with that same unbelievable savagery day in and day out. That is why we are so bitter and feel so helpless when a decision is taken to remove the police and the security forces from west Belfast, giving the freedom of the streets to those who, equipped with radios and mobile in their black taxis, can take complete control on behalf of the Provisional IRA.
It is not true to say that there was no paramilitary display and no disturbance in Belfast as a result of withdrawing the police and the Army. No shots may have been fired over the coffins, but the deceit is that the terrorists go round the corner into the next street, set up a shrine and there, before the media invited for the occasion, display the same paramilitary activity as they used to display over the coffins.
We must not be fooled by the platitudes that we hear from those who take it upon themselves to speak on behalf of the paramilitaries who supervise the funerals. I refer to the SDLP. I refer to the Irish Catholic Church and to those priests who can describe a terrorist who died in Gibraltar as someone who died like Jesus Christ. Neither I nor those of my co-religionists who heard those words can accept such blasphemy.
I ask the Secretary of State to try to listen to the voices of those, Protestant and Catholic, who want nothing to do with any paramilitary organisation and who would condemn the Ulster Defence Association and the Ulster Freedom Fighters as they would condemn the Provisional IRA and Sinn Fein. Will the right hon. Gentleman now listen to the voice of the people and those who try to be responsible elected representatives on their behalf, and not give way to something that may appear to have short-term advantage, but which will provide nothing but long-term disadvantage, suffering and tragedy for the people of Northern Ireland?

Mr. King: The whole House understands the depth of feeling with which the hon. Member for Fermanagh and South Tyrone (Mr. Maginnis) speaks. The name of his constituency says it all to anyone who knows anything about recent events in Northern Ireland.
In my statement last Thursday I made clear my concern about some of the comments that are made in addresses at funerals. I include such people in the categories of those who have a part to play in trying to ease tension and build bridges. It is incumbent on everyone to have great regard to the phrases that they use, whatever the emotion of the moment.
In that connection, although I obviously do not approve of paramilitary displays in which people slide down side alleys and set up little stunts for the television cameras, that is markedly preferable to their appearing at the graveside as they have in the past. Having said that, it is obvously against the law and should not happen.

Although we prize highly freedom of speech and publication, the broadcasting authorities for which those stunts are arranged, and without which they would have no purpose, should consider their responsibilities in such matters.
In all the horror of the murder of the young girl in the hon. Gentleman's constituency, what revolted me as much as anything was the expression of regret from Mr. Adams, who said that he thought it was a mistake.

Several Hon. Members: rose——

Mr. Speaker: Order. I fully understand the importance of the matter, especially to those who represent Ulster constituencies, but I remind the House that there is an important debate to follow this. I hope that questions will be brief so that answers may also be relatively brief.

Mr. James Kilfedder: I join in the expression of sympathy. Is not the photograph of the naked young soldier poignantly relevant to this season leading up to Good Friday, and does it not remind us that we must never give way to despair?
The Secretary of State said that IRA funerals pose a serious problem. When he spoke to Cardinal O'Fiaich this morning, did he point out that the IRA uses its funerals for the glorification and justification of terrorism, and did he ask the Cardinal whether the Church will excommunicate the terrorists? Did he ask him to ensure that IRA funerals will be reduced to private funerals, with minimum rites and only a small number of people? That would save the security forces from danger.
Finally, did the Secretary of State raise at the Anglo-Irish Conference the question of allowing the coffins from Gibraltar to be landed at Dublin, thereby prolonging the funeral and inciting people to violence?

Mr. King: I do not think that it was any wish of the Irish Government for the coffins to arrive in Dublin. That was the choice of the families, and of others who may have been seeking to influence them. It posed significant problems for the Irish Government in policing the funeral as well.
I commend to hon. Members the editorial in the Irish News today. I am struck by some of the phrases in it. It states:
The participants in the brutal orgy may well have formed part of the congregation that had just celebrated the ritual of the sacred liturgy.
It goes on to say:
The barbaric murders of Corporal Wood and Howes were a satanic rejection of the Christian faith.
I think that the leading Nationalist Catholic newspaper in Northern Ireland brings across very forcefully the strength of decent Catholic feeling about those matters.

Mr. William Ross: The Secretary of State told us at the beginning of his statement that the soldiers who were killed had been briefed earlier in the week. Is he aware that the individual whose funeral took place on Saturday was still alive at the beginning of the week, and would he care to comment on that?
My right hon. Friend the Member for Lagan Valley (Mr. Molyneaux), the leader of the Official Unionist party, made it clear that the Royal Ulster Constabulary could not have moved to the rescue because of a directive from the Chief Constable. Will the right hon. Gentleman take it from me that the people of Northern Ireland expect more from him than a new telephone number if we are to deal with IRA terrorism?

Mr. King: The hon. Gentleman's contribution falls somewhat short of the level that I would have looked for on this occasion.
First, let me say to him that the warning and guidance given to soldiers concerned funerals in west Belfast during the course of the week. He will be aware from my recitation that, sadly, there was a funeral every day from Wednesday through the whole of the week in west Belfast. As I have made clear, the route that the soldiers were on was never approved for non-operational use, whether for funerals or other matters.
As for the directions that were given, it was a police decision when to intervene. Allowing for the uncertainty at the start about just what was happening, and the difficulty of identifying events, the police arrived on the scene fairly soon, and in some numbers, but, sadly and tragically, not soon enough to prevent the deaths of the corporals.

Rev. William McCrea: My constituents and I join Members of the House, who, genuinely and sincerely, send their sympathy to the families who have been so sadly and tragically bereaved.
On Saturday, shortly after the two corporals were murdered, I stood at the bedside of my constituent, young Stanley Liggett, whose girl friend was being prepared for her coffin. As I stood at the bedside, that young man did not know that his young partner was dead. He was hoping, as he spoke to me, that soon he would be joining her in happiness, for the love that was in their hearts the one for the other.
I assure the Secretary of State that the people of my constituency do not feel happy about the security decision. Whether hon. Members accept it or not, it is different for those who live with this problem day after day. It is different for those who watch coffin after coffin going down the road. It is different for those looking into the faces of their loved ones—their kith and kin—who have been murdered.
People are lecturing us on how we are supposed to feel at the time of our sorrow and grief. We do not take very kindly to lectures at present. For 20 years our hearts have been cut asunder and our homes have been butchered. I know, because that happened to my family. I know what it is to carry the coffins of two young people down the road together.
There are Members of the House who have played along with the terrorists, and with a terrorist organisation, inviting its members to this country and sitting down with them. Indeed, in recent days, the leader of the SDLP has been in consultation and negotiation with the head of Sinn Fein. It was a Conservative Member who said on Northern Ireland radio this morning that the hon. Member for Newry and Armagh (Mr. Mallon) was an apologist for the terrorists. That was not my statement. It was made by a member of the Secretary of State's own party, who was trying to get out of the present tragedy of condemnation of the awful, brutal, savage murder of our people.
We want to live, and, whether or not it is accepted by hon. Members, we want to live in peace, but we can never live in peace with murderers. We cannot live in peace with men who have the weapons to kill our people. I ask the Secretary of State, genuinely and sincerely, to tell the House when he will fulfil the promise that he made at that Dispatch Box that he would bring peace to Northern

Ireland with the eradication—that is the word used both by him and by the Prime Minister—of terrorism. I beg of him: let it be soon, for that is what my people cry out for.

Mr. King: The whole House understands the reasons, and the most recent reminders, that have prompted the emotion with which the hon. Gentleman has spoken, and I know that every right hon. and hon. Member will respect them. The hon. Gentleman., too, will respect the fact that he is not the only Member of the House who feels deeply and tragically about the extent of the suffering and sorrow. I have taken certain responsibilities as Secretary of State. I hope that I do not lack feeling, and I share the concern that the hon. Member feels so acutely, with even more personal knowledge of the people concerned.
Against that background, however, we all have a duty to work for the future, to try to make it better for people, and to find a way through the problems and tragedies. That is why I say that it must be through co-operation. We should not try to find people whom we can criticise or make into scapegoats. We should try to find people with whom we can build and improve a life for all those in the Province.

Mr. Seamus Mallon: While expressing my horror and revulsion at the horrible killings of the recent past, and the 2,600 killings that have already taken place over a number of years, let me say that the understanding and sensitivity shown by the Secretary of State over a very difficult recent past have been recognised and much appreciated.
As one who publicly urged the Chief Constable of the RUC not to allow a confrontation to develop at the funerals, I feel that it would be absolutely wrong to allow the Chief Constable to be ultimately responsible for that decision, which I believed then was right, and I still believe was right. Having said that, may I ask the Secretary of State whether he agrees that the essence of the problem has not been changed by the terrible events of recent days? The essence of the problem remains the same, and therefore the essence of the solution must necessarily remain the same.
I strongly urge the two Governments, through the structures that they have developed for themselves, to approach a solution to the problem in terms of creating, not just peace, but the type of political stability that is so essential. If that were done, there would be a response, believe it or not, from the political community in the North of Ireland. Without that, every other effort is to no avail.

Mr. King: The challenge for political dialogue and progress is now within the Province, and that must now be addressed. To those who believe that there might be some solution through violence, the events of recent months, and above all the horror of Saturday, have shown where violence leads and shows the evil of the people who seek to perpetrate it.
I note what the hon. Gentleman said about the Chief Constable. He made a comment about the Chief Constable not having to take the responsibility. The Chief Constable does not shirk responsibility, and I have the greatest admiration for him in that respect. I hope that the House recognises that I will not shirk my responsibilities either. In making my statement I did not wish to cause confusion and suggest that responsibilities are different from what


they are. I have no hesitation in making it clear that I stand fully behind the Chief Constable in the decisions that he took.

Several Hon. Members: rose—

Mr. Speaker: Order. I must tell the House again that I must have regard for subsequent business. Many hon. Members who are rising have already spoken in the Budget debate, and there is a long list of hon. Members who wish to speak in the debate today. I shall allow a further five minutes of questions on the statement, and then we must move on.

Mr. Nigel Forman: Is my right hon. Friend aware that, like all my constituents in Carshalton, I and all hon. Members were deeply shocked and appalled by these tragic murders at the weekend? Our hearts go out to the parents and family of Corporal Derek Wood, who lived in my constituency. Is my right hon. Friend further aware that we were gratified by his words of sensitivity and sympathy for the families and that these will be of great comfort to them in their time of trial? Will he see to it that the results of the review that he has set in hand about the policing of funerals are speedily considered and acted upon?

Mr. King: I am grateful to my hon. Friend. As he said, Corporal Wood was one of his constituents, and we understand very well my hon. Friend's feelings on the matter. I hope that he will draw to the attention of the family the words of my right hon. Friend the Member for Woking (Mr. Onslow), who has just returned to the Chamber. The House will have noticed that he spoke most movingly, and my hon. Friend will draw attention to the strong approbation of my right hon. Friend's admiration for two very brave young men.

Mr. Clive Soley: There is considerable sympathy for the Secretary of State in what must have been the most difficult week of his political career in the most difficult job in British politics. We must also recognise the special courage that enables two NCOs not to use their weapons when they could have done so in the closing minutes of their lives. Have we not seen a chain reaction of events that can be dealt with only by the very closest co-operation between London and Dublin?
Bearing in mind the events, not only of the last week, but of the last few months, will the right hon. Gentleman state clearly that the British Government's response to paramilitary organisations, whether Unionist or Republican, will always put first the British national interest of protecting the democratic forms within which we operate, and the rule of law? If we are ever seen to operate, or are believed to be operating, outside those, we shall undermine our own position. If we can reiterate that and operate within it, we will not only carry Dublin with us, but will triumph in the end, because democracy can triumph only when we operate on that basis.

Mr. King: I am grateful to the hon. Gentleman for the close interest that he takes in this subject. He will excuse me if I do not reply in detail, but, broadly, I agree very much with what he said.

Sir Antony Buck: Does my right hon. Friend agree that, while this is a tragic occasion, it is none the less an occasion on which we can all

appropriately unite to commend the work of the heroic forces of law and order in the Province—the UDR, the RUC and our own armed forces? Does he agree also that probably no armed forces in the world but ours could have sustained the burdens that they have had to sustain over a prolonged period? I hope that he will join me in hoping that before very long there will be condemnation of the violence direct from the Vatican.

Mr. King: My service in Northern Ireland forcefully brings home to me the debt that we owe to the security forces, not only for the effectiveness of their operations, but for the restraint and good humour with which they are conducted. In all the annals of their activities and service in Northern Ireland there has been no greater illustration of that restraint than the courage of those two young men.

Mr. Roy Beggs: On behalf of my constituents and myself, I, too, wish to place on record my sympathy for the relatives of the two young soldiers, for the family of Jillian Johnston and for the family of the constable who was murdered in Londonderry, Constable Clive Graham. Many hon. Members have spoken about the courage and bravery of those two young soldiers. I hope that the message will go to their colleagues who are still serving in Northern Ireland that we do not want any more of them to sacrifice their lives unduly. I can tell the Secretary of State that my constituents see that there are still no-go areas. As long as our people perceive that there are such areas, the Secretary of State must take note and with the Chief Constable take steps to ensure that there is proper policing throughout the Province.
May I also convey to the Secretary of State our very grave concern that in the absence of proper security and policing at IRA demonstrations those who are there already tooled up for murder and violence will use any excuse to perpetrate that violence? It is fine to suggest that the problem has to be solved within the Province. We as Unionists accept that, but we will play our part only when the conditions are right. The conditions can be made right by the Government of the Irish Republic and our own Government—with the agreement of the SDLP, if it is genuine—setting aside the obstacles to progress and the disgraceful so-called Anglo-Irish Agreement, which has produced nothing of success. It is being bolstered up. We must admit that we shall never have progress until the conditions and the opportunity are made available so that all the people in Northern Ireland can suggest a way forward that can be accepted and supported by both Governments.

Mr. King: I should like the hon. Gentleman to give me any details of any no-go area of which he is aware. I would appreciate it if he could give me those details. The determination and courage of the security forces ensures that such areas do not exist. The hon. Gentleman sought to widen this into other political issues. I should be happy to debate those with him at any time.

Several Hon. Members: rose—

Mr. Speaker: Order. I shall bear in mind those hon. Members who have not been called on this statement when we return to this subject again.

Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker.

Mr. William Ross: On a point of order, Mr. Speaker.

Mr. Speaker: Order. I am on my feet. I shall take points of order in a moment.

STATUTORY INSTRUMENTS, &c.

Ordered,
That the draft Minors' Contracts (Northern Ireland) Order 1988 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Boscawen.]

Northern Ireland Statements

Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker. I want to make it absolutely clear that I make absolutely no criticism of your position. This is a genuinely serious matter. Over the past 12 months I have sat through almost every statement on Ireland and have attended almost all the debates that have taken place. I want to draw your attention to a matter that worries me. It is one that is often discussed privately by my hon. Friends and is about the whole arrangement for calling hon. Members to ask questions about matters relating to Northern Ireland. We had a good example today.
We understand your difficulties, Mr. Speaker, because you feel that you have to call Northern Ireland Members. Today no Labour Back Benchers were called. I say again that we understand your dilemma, Mr. Speaker, but this matter is one for the whole of the United Kingdom. If, by any chance, you can hear us speaking among ourselves, you will know that we are commenting on the fact that we do not believe that the problems of Northern Ireland will be resolved by Northern Ireland Members coming to the House periodically to complain about what has happened during the course of these violent days. That is not the way forward. The time has come for other hon. Members, particularly on the Labour Benches, where there are many differing views, to be given the right to make their case. I regret that, once again, that has not been possible today.

Mr. Anthony Nelson: rose——

Mr. Speaker: Order. We have a heavy day ahead of us and the hon. Member for Workington (Mr. Campbell-Savours) is one of those wishing to speak later, if he is lucky.
The Northern Ireland Members who have spoken today and told us that they live daily and nightly with this tragedy have a right to express their strong feelings. I fully understand that this is a United Kingdom matter, but I hope that the House agrees that those who are most directly affected and those who have lost constituents in such tragedies should take precedence.
I hope also that the House will realise that, if we were to have an extended question time on such matters., we would put in jeopardy those hon. Members who rightly believe that they should be called during the subsequent debate. It is question of balance and I do my best to ensure that.

Mr. Nelson: Further to that point of order, Mr. Speaker. While supporting everything that you have just said, I ask you to bear in mind that the comments of the hon. Member for Workington (Mr. Campbell-Savours) apply equally to those Back Benchers on the Government side of the House, who represent other parts of the United Kingdom, feel equally strongly about the matter and have not had an opportunity to participate in the questioning.
I wish to ask for your ruling on two points. I believe that you were right to call those hon. Members who have spoken, but those of us who believe that a much tougher policy needs to be instituted immediately did not have an opportunity to put that point to you. You, Mr. Speaker, are uniquely sensitive to the mood of the House. You know the mood of the country after such events. If this were a unique occasion and you felt that you could and


should do so, you would extend question time on this matter. I ask you to bear that point in mind. I know that you have not done so before, but, such is the mood of the House, that I urge you to give other hon. Members an opportunity to express their heartfelt view that we need to get tougher.

Mr. Speaker: Order. That is enough. The hon. Gentleman is one of a number of hon. Members who have in the past written to me to express their distress at not being called in debates. It is difficult for the Chair to balance the rights of those hon. Members who wish to make speeches in a debate and those who wish to ask questions after statements.

Mr. William Ross: rose——

Mr. Speaker: Order. I am highly sensitive to the interests of the whole House in this matter, but I must balance the rare opportunities that hon. Members have to make speeches in this place. There are opportunities to raise points during questions on Northern Ireland. I do not know whether the hon. Gentleman comes in for Northern Ireland questions, but I shall bear in mind those hon. Members who have not been called today when we next have Northern Ireland questions.

Mr. Ray Whitney: Further to that point of order, Mr. Speaker. I support the point raised by my hon. Friend the Member for Chichester (Mr. Nelson). This problem is quite different from those we have faced in the past. I ask you, Mr. Speaker, to reconsider the matter. We are now in our fourth day of debate on the Budget, in which I have had an opportunity to participate, but the horrors of Saturday put in context the issues of the Budget and suggest that all hon. Members, not only those directly concerned with Northern Ireland, should have an opportunity to speak.

Mr. Speaker: I accept that, but the hon. Gentleman has already been called in the Budget debate. He must have regard to his right hon. and hon. Friends who have not yet had that opportunity.

Mr. William Ross: Further to that point of order, Mr. Speaker. We on the Official Unionist Bench fully understand the frustrations of hon. Members on both sides of the House who, because of pressure of time, cannot be called. In an effort to be helpful, I suggest that, as the Prime Minister and the Leader of the House are both present and can hear what I say, they might take the opportunity now to arrange a debate on this matter before the House rises for Easter, so that we may explore the differences between us.

Mr. Speaker: I think that that was a helpful suggestion.

Sir Peter Emery: Further to that point of order, Mr. Speaker. Although I appreciate the great difficulties that you face at present, may I suggest that, when dealing with matters of great emotion, the normal rules of procedure should be adhered to even more strictly? Many of the points raised were not in the interrogative, but in the form of long statements. That makes it much more difficult for the Chair and limits the opportunity of other hon. Members to speak. The House should support you, Mr. Speaker, in trying to ensure that the interrogative and the proper aspects of procedure are used at such times.

Rev. Martin Smyth: Further to that point of order, Mr. Speaker. I share the frustration of the hon. Member for Workington (Mr. Campbell-Savours), but I hope that the House will note that very few Northern Ireland Members have been called in the first 15 questions to the Secretary of State for Northern Ireland on Thursdays. We are not objecting to that. That is the way the House works and those of us who have come regularly to try to participate in the debate know how difficult it is to do so. That is the price of the House's democracy.

Mr. Speaker: I fully understand the concern of the House about such matters. I hope that hon. Members understand the difficult position in which the Chair is placed in seeking to be fair to everyone.

Orders of the Day — WAYS AND MEANS

Order read for resuming adjourned debate on Question [15 March].

Mr. Speaker: Before I call the Secretary of State for Employment, I remind the House that 26 right hon. and hon. Members are seeking to participate in today's debate of whom nine are Privy Councillors. Not all Privy Councillors will he called as early as they would perhaps wish, but I beg the House to make short speeches so that as many Back Benchers as possible may be called.

Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker. I am sorry to press you again, but I raised this matter on a previous occasion when we had a listing of this nature. Will you please ignore the status of Privy Councillors when calling hon. Members to speak in the debate?

Mr. Speaker: I do not think that I ought to ignore their status, but I have already said that Privy Councillors may not be called as early as they would normally hope to be.

AMENDMENT OF THE LAW

Motion made, and Question proposed,
That it is expedient to amend the law with respect to the national debt and public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply;
(b) for refunding any amount of tax;
(c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(d) for relief other than relief applying to goods of whatever description or services of whatever description.—(Mr. Lawson.)

Question again proposed.

Budget Resolutions and Economic Situation

[Relevant documents: European Community Document No. 9561/87, Annual Economic Report 1987–88 and the unnumbered document, Annual Economic Report 1987–88 (final version as adopted by the Council).]

The Secretary of State for Employment (Mr. Norman Fowler): I shall seek to follow your advice, Mr. Speaker, on the length of speeches. This is the last day of the Budget debate and I wish to concentrate on the Government's economic policy and the part that the Budget of my right hon. Friend the Chancellor of the Exchequer will play in carrying forward that policy.
The Budget has many strengths. It reduces taxation to the benefit of both individuals and companies. It reforms taxation by removing the long-standing unfairness of the system regarding married women. It recognises that the primary function of taxation is to raise revenue, not to punish success.
I believe that those individual changes will be welcomed throughout the country and will add to the reputation of my right hon. Friend. But the Budget is far more than a

series of individual measures. It is a further step in a strategy that is summed up in the very first sentence of the Budget Red Book:
the objective of the Government's economic policy is to defeat inflation and to maintain a vigorous and enterprising economy with sustained growth of output and employment".
Now that, doubtless, is a general statement of policy that would probably attract widespread support. It would probably have the support of some Labour Members—certainly, I suspect, the support of the hon. Member for Dagenham (Mr. Gould) who is replying to this debate and leads the revisionist faction of the Labour party. Indeed, over the past four days of the Budget debate, right hon. Gentlemen who have led for the Opposition have set out their interpretation of a "vigorous and enterprising economy" and their hopes for
sustained growth of output and employment".
But on one point there has been a deafening silence from the Opposition Front Bench—that is on policies to "defeat inflation". If one reads the speeches of the Leader of the Opposition, the shadow Chancellor and the shadow Secretary of State for Social Services one will search in vain for any serious mention of inflation. It is not just that they have no major passage on it —the word hardly crosses their lips. Yet the whole point of the Opposition's attack on the Budget has been their claim that there is a conflict between the Government's economic policy and the demands of social justice. I find it inexplicable that in a case that majors on social justice the need to control inflation does not even rate a passing comment. Surely the most significant feature of life in Britain today compared with 10 or 15 years ago—the most important social advance — is that we do not suffer from the evil of inflation.
The most important change in the lives of people in this country is that we now live with an inflation rate of just over 3 per cent. Even that is too high, but compare it with what went before and one sees the contrast. Between 1974 and 1979, inflation averaged over 15 per cent. For 13 months in 1975 and 1976 inflation never fell below 20 per cent. At its peak, Labour's inflation rate reached the banana republic heights of almost 27 per cent. We have heard a great deal from the Opposition about social justice, but the truth is that there is nothing more socially divisive than inflation. Nothing is more likely to make the rich richer and the poor poorer. Inflation strikes at the weak, and the victims of inflation were literally millions of people in this country who no longer had the power to look after their own interests. The victims of inflation were the elderly living on fixed incomes and it is to the shame of the previous Labour Government that they knocked the heart out of a whole generation of elderly people in this country.
I am not prepared to take lectures from the Opposition on social justice. There was no social justice in old people being brought to their knees by the financial incompetence of the previous Labour Government.

Mr. Nigel Griffiths: Will the Secretary of State give way?

Mr. Fowler: I shall give way in a moment.
There was no social justice in a Government who were prisoners of the worst prejudices of the most outdated trade unions in the western world. Above all, there was no social justice in the inflation that Labour inflicted on this country. What the Opposition have never understood is


that the basis of any social policy worthy of that name must be a sound economic policy. Above all, it is that sound economic policy that the Government have achieved.

Mr. Nigel Griffiths: The Secretary of State has talked about social justice for pensioners. Where is that justice when, from April, as a result of Government policy, 700,000 pensioners will no longer be able to claim housing benefit?

Mr. Fowler: I will come to that and a whole series of other points regarding social security, inflation and concern for the elderly.
Low inflation, steady growth and a balanced budget have made possible improving productivity, rising levels of investment, falling unemployment and real and sustainable increases in spending on social programmes. It was precisely the failure of the previous Labour Government's economic policy that forced them into social policy "U" turn after social policy "U" turn.
The hon. Member for Edinburgh, South (Mr. Griffiths) has spoken of social security, but the cut made by Mrs. Barbara Castle in 1976, by fiddling the method of uprating, cost pensioners more than £1 billion — the biggest cut in the social security budget made by any Government since the war. That cut was made by the previous Labour Government.

Mr. Nigel Griffiths: Will the Minister give way?

Mr. Fowler: In a moment.
The Opposition now talk of health, but the cut of 30 per cent. in hospital building made by the previous Labour Government was the biggest cut in the Health Service made by any Government since the war.
The right hon. and learned Member for Monklands, East (Mr. Smith), the shadow Chancellor of the Exchequer, referred to his Government's specific record in 1978. Let us consider what was said in 1978 about the Health Service and Labour policies. The Sunday Times commemorated the success of Labour policies with a three-part series entitled "Crisis in the NHS". The chairman of the British Medical Association was calling for an injection of £1 billion into the Health Service and said that the National Health Service in Britain was sick, inadequate and impersonal. Some months previously the general secretary of the Confederation of Health Service Employees, the late Albert Spanswick, said the National Health Service was more in danger and more in fear for its very existence than ever before. That was the state of affairs in 1978 and that is what the shadow Chancellor specifically put before the House as an example of what happened under the previous Labour Government.

Mr. Max Madden: The Secretary of State appears to have reversed Ministers' custom of giving the history lesson at the end of speeches—we have had it at the beginning. Will he address himself to a statement that has been made by an independent research body that states that the social security changes to be introduced in April will put the lives of those most vulnerable in our society at unacceptable risk? That body refers specifically to many pensioners and the families of the unemployed. Will he explain why the Budget did not recognise the great hardship and financial problems that are faced by many

pensioners, many low-paid families and unemployed families? We do not want a history lesson. We want to know what the Government will do for those people. They have failed miserably in the Budget to help those people.

Mr. Fowler: I am sure that the hon. Gentleman does not want a history lesson. However, when the hon. Gentleman and his hon. Friends seek to lecture the Government on their social conscience and in particular about their social record we have a right to point out precisely the social policy record of the previous Labour Government. In terms of social security and health they have a deplorable record. The hon. Gentleman is concerned about social security changes, but family credit is one of those changes and that will provide more money and £200 million of additional resources for low-income couples. The whole purpose of that change is to target and direct resources to low-income people.
Let me try to reach a point of agreement with Labour Members. At the beginning of the Budget debate the shadow Chancellor—he was here a moment ago, but perhaps he does not like being contradicted on what he has previously said—stated:
one of our top priorities should be to see how to build a strong, competitive industrial economy that can sustain growth, not in episodic spurts or election-oriented booms, but powerfully, continually and steadily"—[Official Report, 16 March 1988; Vol. 129, c. 1123.]
Let us test that statement.
We are now about to enter the eighth successive year of economic growth at an average of 3 per cent. a year. Last year the British economy grew faster than that of any other major industrial country. If that is "episodic" growth, it is the kind of episode for which Labour Governments of the 1960s and 1970s would have given their eye-teeth.

Mr. Doug Henderson: rose——

Mr. Kevin Barron: rose——

Mr. Fowler: I will not give way at this time.
Let us take another indicator—employment. At the time of the election Labour Members appeared on platform after platform around the country to say that if the Government won the election the improvement in employment would quickly disappear and unemployment would rise. What has happened? Since June last year, unemployment has come down by almost 400,000. More than that, it has come down every month for the past 19 months. It has now fallen by 680,000 and that is the biggest sustained fall in unemployment since the war. Within those figures, there are further encouraging features. It is encouraging that the biggest falls in the rate of unemployment have occurred in some of the areas where the problem has been worst—for example, in the west midlands, the north-west, the north, and in Wales. It is encouraging——

Mr. Bryan Gould: Will the Secretary of State give way?

Mr. Fowler: I will give way in a moment.
It is encouraging that there have been record falls in school-leaver unemployment and that there has been a record fall in long-term unemployment after unemployment rose continuously from the early 1970s.

Mr. Gould: I know that the right hon. Gentleman will not make predictions about the future trend of


unemployment because that is the position that he and his right hon. Friends have taken consistently. If he will not make a prediction, would he be prepared to make a calculation? If unemployment continues to fall at the current rate, how long will it take before it reaches the level which the Government inherited?

Mr. Fowler: As the hon. Gentleman said, this Government are following the practice adopted by the previous Labour Government by not making predictions of that kind. The hon. Member for Dagenham (Mr. Gould) must take some credit for the position that existed in 1979. He knows as well as I that the recession hit our economy then just as it hit every other western European country. The significant difference is that the reduction in unemployment and the growth in jobs in this country are now far greater than the reduction in unemployment and growth in jobs in not just one or two countries in Europe, but in all Europe.
The challenge now is to ensure that the improvement continues and spreads. The Budget helps in that. It improves incentives, increases disposable income and reduces the burden of taxation on business, particularly on small business.
We should always remember that one of the outstanding features of the past nine years has been the development of small businesses. In the years to 1979, the number of self-employed people fell by 100,000. Since 1979, the number of self-employed people has increased by 1 million. The outlook for jobs is better than it has been for more than a decade. If we can continue to strengthen the economy and create employment through growth, we shall have the opportunity to keep unemployment on its present downward trend.

Mr. Barron: Will the right hon. Gentleman give way?

Mr. Fowler: I will not give way at the moment.
We know that there are 700,000 unfilled job vacancies in the economy. Our duty is to ensure that unemployed people are given the chance to acquire the skills that they need to fill those jobs. That is the purpose of the new employment training programme.
I want to emphasise that further improvement in the employment position is not automatic. Barriers stand in the way of job creation and the continuing fall in the level of unemployment. One of those barriers is excessive pay settlements. They threaten our progress in generating the many thousands of new jobs that we need and will continue to need. They have that effect because they discourage employers from taking on more staff, they reduce opportunities for increasing profitable output, and they hold back investment in the future. At the same time, excessive pay settlements reduce our competitiveness in world markets and that, again, can only restrict the growth of output and jobs.
There is another barrier to jobs — strikes and bad industrial relations. The simple truth is that strikes destroy jobs. The industrial anarchy of the late 1970s reduced industrial output in this country and exported British job after British job overseas. It did more damage to our reputation overseas than any other single factor.
There has been a remarkable improvement since 1979. The number of working days lost on account of industrial disputes has fallen dramatically. There have been fewer

strikes in each of the past three years than in any year since 1940. That record has made a very substantial contribution to Britain's economic recovery.
In the past few days we have seen an absolutely clear demonstration of the connection between jobs and industrial relations in the dispute at Dundee over which union should represent the workers at the proposed Ford plant. More than 1,000 jobs are at stake. The responsibility will be heavy if the plant does not go ahead and the new jobs are destroyed. The only hope now is that union objections to the agreement that has already been reached will be withdrawn. I hope that the hon. Member for Dagenham will confirm that that is also the Opposition's view.
The dispute at Dundee has illustrated with the utmost clarity the importance of inward investment to this country. In the past five years non-oil inward investment has grown from £1·1 billion a year to £4·1 billion a year. Such investment brings jobs and it has brought jobs to some of the areas most in need of employment as the people of Sunderland, south Wales, Plymouth and, indeed, Scotland know well enough.
It is no coincidence that those jobs have increased steadily over the past nine years. Companies from the United States, Japan and Europe have seen that investing in Britain makes sense because of what Britain has to offer, because of our good work force and because those companies have confidence in this Government and above all in the Government's economic policies.

Mr. Barron: Will the Secretary of State give way?

Mr. Fowler: I will not give way at the moment.
Does anyone seriously believe that companies overseas are delaying their inward investment plans in the hope that in, say, the early 1990s there could be a Labour Government? Does anyone seriously believe that companies overseas really want a return to the Labour policies of the 1970s?

Mr. Barron: Give way.

Mr. Fowler: I will not.
That is a self-evidently ludicrous proposition. Yet it is the acid test. Companies will not invest here unless they believe that we have a strong economy and sound economic policies. The most significant change over the past nine years has been in the view that the world takes of Britain. Today Britain is seen as productive, competitive and profitable.

Mr. Henderson: Will the Secretary of State give way?

Mr. Fowler: No.
Today Britain is seen as enterprising and efficient. Above all, Britain is seen riot as a nation in decline, but as a strong and powerful economy. This Budget will reinforce the policies that have made our economy strong. It is a Budget for economic growth and it deserves the support not only of the House, but of the nation.

Mr. Bryan Gould: We are debating a Budget today that has been received rapturously by the rich. The rich and the powerful have showered all the plaudits on the Budget that one would expect from those who are the great beneficiaries of the Chancellor's largesse. However, behind the deafening applause from that small, privileged group we can hear the cries of despair and pain


from those who have been left by the Government, and by the measures that the Government are yet to introduce in the social security changes and changes in housing benefit, with no benefits and very little hope.
There are also cries of protest from those who are perhaps not directly affected by the unfairness at the heart of the Budget, but who nevertheless recognise that unfairness and want to express their feelings. Those people have puny voices. They do not control the media. They do not hold the great offices in the land. They will not take home thousands of pounds in extra pay and be prepared to use it to express their thanks. Such people have a weak voice, but it is echoed and repeated by the Opposition. We accept the responsibility of speaking for them and for pointing out the fundamental immorality of what the Budget represents. Although those voices may be heard only pitifully weakly, they will, in the end, come to stir the conscience of the nation. They will even disturb the sleep of the Chancellor of the Exchequer.
However, I want to address the Budget on a different point. I shall set aside, as the Chancellor manifestly has done, all considerations of morality, social justice and fairness. I shall take on the Chancellor's argument on its own ground. Let us assume that such considerations do not matter—it is difficult to make such an assumption about any self-respecting Chancellor—and that the sole test is whether the things that the right hon. Gentleman has done in his Budget will be in the national interest and for the good of the country's economy. As I understand the Chancellor's argument, there need be no limit to inequality — it should be celebrated and gloried in. Inequality and incentives that give more to those who already have the most will benefit the national economy most, as I understand his argument. Ultimately, it has a further sophistication : even those left out and wholly ignored will derive some minuscule benefit—the crumbs from the rich man's table argument.
This is a convenient theory, which just happens most to serve the interests of those who advance it. That is immediately a reason for great suspicion in deciding whether to take the theory at face or any other value. It is immediately suspect because it is so selective. It applies, so it seems, only to the economic interests of the richest 5 per cent. of society. If the argument is that by giving people more they will work harder and create greater wealth, why does it apply only to the richest 5 per cent. and not to the rest of us? Why is it right to reduce the marginal rates of tax for the richest but to pile the burdens on the rest of us?

Mr. Neil Hamilton: rose——

Mr. Gould: Why do the rich, who are already taking the lion's share of the rewards, need their mouths stuffed yet more full of money before they can produce the wealth on which it is said the rest of us depend?

Mr. Hamilton: rose——

Mr. Gould: I have hardly begun and I have things of greater substance to say, but I shall give way in a moment.
Why is it right to release the rich, already swimming in their money, and at the same time to entrap the poor in the poverty trap and offer them no way of escape? Why is that so beneficial to the economy, when most of us are denied the incentives that the Chancellor proclaims are the heart and origin of economic success?
How does the Chancellor know that the great rewards he is offering the richest 5 per cent. will go to the productive people in our economy? Does he not understand that many of the richest 5 per cent. have little to do with productive capacity or activity? Most hold assets and derive income from them, push bits of paper around, go in for speculative deals in the City, invest speculatively in property and sail close to the wind when they become involved in insider dealings and similar enterprises. So how can we and the Chancellor be sure that, even if his theory is right, he is directing incentives at the right people? What assurances does he have that the money will not be snapped up gratefully by those who are already rich but idle, and who will be confirmed in their idleness and ask why they should work any harder or do more when they can sit back and wait for a munificent Tory Chancellor to come forward with more goodies? How will this stimulate greater economic activity or wealth?

Mr. David Shaw: Does the hon. Gentleman accept that everyone in his former country — New Zealand — is rich because that country now has a maximum top rate of 34 per cent?

Mr. Gould: The hon. Gentleman has his facts wrong. Fortunately, as a British citizen and long-standing hon. Member, I no longer have the slightest interest in or responsibility for the policies of Governments in my native country.
It is hardly flattering that the Chancellor should so demean even the rich in his expectations that he believes that Sir Ralph Halpern and all those others will be so ready to respond, like Pavlov's dogs, to the sign of yet more money bags being floated in front of them and will work harder as a result. That is not true, and the Chancellor is wrong if he believes it.
If this theory is correct, what evidence to support it comes from our experience and that of similar countries? We have relatively recent experience of what cutting the top rate of tax means; the Chancellor's predecessor cut it in 1979. What an economic miracle we had then. We had the worst recession that any advanced industrial country has ever experienced, together with the worst fall in output and investment and the worst rise in unemployment. That was the earlier consequence of the strategy upon which such faith is now pinned. So there is little in our experience to sustain the Chancellor in his view.
What of the experience of other countries? There is one country about which Opposition Members have made rather generous and flattering comments in recent years, but whose economic performance has been severely criticised by Conservative Members. I refer to the United States and the wicked policies it has been pursuing. Yet the United States happens to be near the bottom of the international league of top rates of tax. Of the other countries that deserve even more praise for their economic performance, Japan, for example, is near the top of the league for marginal rates on top income earners. And of all the countries of western Europe perhaps the one that has been the most successful economically in recent years has been Sweden. What is Sweden's rate of tax for the top income earner? It is 77 per cent. I express no view on whether that is the right figure, but I ask the Chancellor or the Financial Secretary to the Treasury to explain how the Swedes have done so much better than we have on


almost every count over the past few years while appearing to contradict the fundamental tenets of the right hon. Gentleman's Budget. I see that we have no answer.
If the Chancellor has no evidence to offer it is not because none is available. The evidence is there because the Chancellor asked for it. He asked his Treasury officials to commission a great study from Professor C.V. Brown of Stirling university, asking him to investigate incentives so that—one assumes—the whole ludicrous notion could be substantiated. The report has now been available for a long time. Of course, we rarely hear it mentioned or have our attention directed to it. When the Chancellor brings himself to mention it, he denigrates it with all the power at his command.

Mr. Gordon Brown: The report cost us £500,000.

Mr. Gould: As my hon. Friend says, the report involved a great deal of public expenditure to produce the answer, which was that there was no evidence for the Chancellor's basic theory that cutting taxes increases incentives and induces people to work even harder.
There is an American study. Maybe the Chancellor or the Secretary of State will say, "What about the study done by Professor Lindsey in the United States?" He made a valiant effort to disentangle the various factors which may be at work here, but he concluded that if there was any detectable consequences—he was doubtful about it—of reducing the marginal tax rates of the top earners, any such reduction would have to be offset by removing tax shelters which they had previously enjoyed. What a pity it is, if the Chancellor aheres to that view—there is no evidence of it — that he did not follow it through. Instead of removing tax shelters, he has created new and much more offensive ones.

Mr. Ian Taylor: Will the hon. Gentleman confirm that tax revenue from the top 5 per cent. has risen since 1979 despite the fact that tax rates have gone down substantially?

Mr. Gould: The hon. Gentleman demonstrates the fact that the Government have not waited to manipulate the tax system to benefit their friends at the top of the income scale—they have already widely increased inequalities and substantially increased the salaries of people at the top. To pray that in aid as justification for yet further tax cuts is ludicrous and offensive.
If the Chancellor is left with nothing by way of evidence or experience to justify his theory—we are told it underlies his Budget strategy—what is he left with? I suggest that what he is left with is political prejudice, and an unattractive one at that. It is the prejudice which says simply, "It is right for the best off to have yet more. Greed is in itself a good thing." We remember Ivan Boesky travelling the world delivering highly paid lectures to adoring audiences, telling them, "Feel good about greed." We know what happened to Ivan Boesky. We know what the Chancellor has said in his Budget. He has said to the British people, or at least to that minority who benefited so enormously, "Feel good about greed." What we have sitting on the Government Front Bench is the Boesky of the Budget. Just as Boesky came to a grim end, and just as justice caught up with him, so will it catch up with the Chancellor.
The view that inequality is somehow the key to economic success is denied by anybody with eyes to see.

If we look around the country, we see alienation, bitterness, division and apathy. Nobody in his right mind could conceivably argue that widening social divisions and increasing inequalities could be anything other than utterly harmful to our social cohesion and our economic prospects. Inequality is inefficient. Any strategy which is designed to increase inequalities is doomed to failure. That is the conclusion that anybody with wit and eyes to see must reach.
The Chancellor is completely wrong if he believes that, by widening inequalities, he will usher in an economic miracle for Britain. We shall see, but I believe that we shall all have a rude awakening on this central question.
I shall now change the focus slightly, away from the Chancellor's dealings as between one taxpayer and another. The richest 5 per cent. are the only people who have enjoyed tax cuts until this Budget—everyone else has paid more in tax. The Chancellor's dealings with the top 5 per cent. are a monument to immorality and unfairness. I shall consider whether the Chancellor's use of the money is in the national interest and in the interests of the economy as a whole. What should he have done with the money at his disposal?
We know exactly what the answer is. The demand was made and endorsed time and again—by the public, by doctors, nurses and others who serve in the Health Service and by patients. They all agreed that if the Chancellor had money available, the Health Service was where it should go as a first priority. They did not say that they never wanted tax cuts in any circumstances, just that the first priority should not be tax cuts but the NHS. The demand was made repeatedly by those who are best placed to know.

Mr. Phillip Oppenheim: Will the hon. Gentleman give way?

Mr. Gould: No. I do not intend to linger on this point. The money could be put to a range of purposes. Britain today has been characterised by Professor J. K. Galbraith as private affluence combined with public squalor. Anyone who travels abroad and compares what they see in other more prosperous countries with what is increasingly apparent on our streets must see the public squalor over which the Government have presided. That is another priority to which the Chancellor could have directed resources. Instead, he chose to make his tax cuts.
The Opposition contend that that was a sin of both omission and commission. By cutting taxes for people who are already consuming at a frenetic rate, the Chancellor has ensured that a further powerful stimulus is given to a consumer-led boom which is already running the country into deep trouble. The Chancellor has no idea how to control the explosion in private credit. His only response is to make the consumer boom forest fire yet worse. We cannot afford it—even the Chancellor predicts a balance of payments deficit for the coming year of £4 billion.
In itself, that deficit is not too serious. It is reasonably easily financed if that is where it stays, but the real cause for worry is the trend — the rapid, terrifying and dizzying descent into a balance of payments deficit, even with the enormous benefits of North sea oil. That is what should be worrying the Chancellor. While one ought not to attach too much importance to one month's figures, we can hardly say that January's figures were the most auspicious beginning to this calendar year's trading results.
The true awfulness of our position can be appreciated only if we divert attention for a moment from the overall balance of payments to the manufactured trade deficit, because it is there where we chalked up a deficit of £6 billion last year. Even the Chancellor's prediction is of an £8·5 billion deficit this year. That is evidence of an economy that is increasingly unable to pay its way and increasingly dependent on North sea oil, which is running out. That is why we should be worried — it is not a matter of whether a static debt is financable. We should be worried about what that state of affairs tells us about our loss of competitiveness, output, productivity and performance, bearing in mind the fact that our economy depends on its ability to sell to international markets. The problem is a trend which is running us into a deficit which speaks of a failure of economic policy and of productive capacity.
Last Thursday, the Chancellor of the Duchy of Lancaster said that of course Britain is running into a rather worrying balance of payments deficit, but it ought not really to be a source of worry because we are growing so fast and it is natural that we should suck in a lot of imports. That is an astonishing assertion. Has he never considered the example of the really strong and successful economies which have consistently maintained high levels of growth, and where the corollary of growth has been a substantial balance of payments surplus?
Why are we told that if our country is to grow we must increase our already famous propensity to import? An explanation was offered, in part, by one of the Chancellor's hon. Friends on Thursday, who said that Britian was running into a balance of payments deficit because it had to import a great deal of machinery, capital equipment and all the other goods needed to build a strong economy. Why do we not produce those goods in this country? It is because the Government's economic policies have decimated our industrial base. That is the dilemma. It is not an excuse or an explanation; it is a definition of our problem. That is why imports and the balance of payments deficit are so worrying.
Despite all the Government's propaganda and the constant statements by Ministers that Britain is much more competitive now than it has ever been before, the truth is that, measured by virtually every index of competitiveness, Britain is less competitive now than it was in 1979. That is why we are in difficulties, and that is why our balance of payments deficit is so worrying.

Mr. Andrew Rowe: If that is true, why is it that Ford's head of manufacturing in Europe came to us last week and explained graphically how rapidly Ford is beginning to close the gap between itself and its competitors? Indeed, he said that it was by no means a unique phenomenon.

Mr. Gould: The hon. Gentleman prefaced his question with the words, "If that is true". I assure him that it is true, and he can establish that quite clearly simply by reading the official statistics produced by the Government. I hope that he will do me the courtesy of doing exactly that, as I am sure that he will then confirm that on all the indices of export competitiveness Britain is less competitive today than it was in 1979.
The problems to which I am trying to direct the rather reluctant attention of the Chancellor and his colleagues

have been made very much worse by another aspect of the Budget. It has little to do with the right hon. Gentleman's tax policy, but it excited a great deal of interest. I am, of course, referring to the much-publicised disagreement between the right hon. Gentleman and the Prime Minister about their policy on exchange and interest rates. Some commentators listened to the Chancellor's rather elliptical words—brave in their own way, but brief and unclear—and noted that wonderful 0·5 per cent. cut in base rates, and said, "What a magnificently strong Chancellor. We will award him a win on points, even over such a formidable Prime Minister." If the right hon. Gentleman is to be reckoned the winner in the battle—and it is a continuing battle—we shall demand of him a great deal more than a 0.5 per cent. cut in interest rates and the odd phrase tossed away in a Budget speech.
We want an explanation of and real action to deal with interest rates that are twice as high in real terms as those in Germany. Can the Chancellor or anyone else explain that? Can we be given one simple, intelligible reason? Can we have one comprehensible answer? Is there an answer? —[Interruption.] Surely this is an important matter. The Confederation of British Industry and everyone else agrees that high interest rates are a great burden on industry, yet not a single explanation for them has been given. Is that not rather peculiar?

Several Hon. Members: rose—

Mr. Gould: I am seeking an answer from the Government Front Bench. I have no doubt that Back-Bench Members wish to do their best, but until the Prime Minister's eye falls upon them they are not entitled to speak for the Government. I want an explanation from the Government of such a remarkable state of affairs.
The Prime Minister stands on the proposition that we must not buck the markets. I do not know whether that is the Chancellor's view—it may well have changed. The Prime Minister's statement is quite remarkable. Is she unaware that the market is very much influenced by interest rates at twice the level of most other countries? Is that not bucking the market? If the Prime Minister is serious about the effect on the market, why does she not get interest rates down? Is not that the obvious remedy?

Mr. Neil Hamilton: I find it a little difficult to reconcile what the hon. Gentleman is saying now with what he said earlier about the greatest problem being excessive growth of credit. He now asks that interest rates be reduced even further. How does he reconcile those propositions?

Mr. Gould: The hon. Gentleman, perhaps unwittingly, gives the game away. As a hangover from the last trappings of monetarism—[HON MEMBERS: "Answer the question."' I am about to do so. The Chancellor has tried so hard to divest himself of the last trappings of monetarism, yet he still has to use interest rates to choke the explosion of credit. High interest rates are ineffective — indeed, they are often counter-productive, as is immediately discerned by anyone who bothers to study the evidence from the unavailing attempts to use interest rates in that way during the past eight or nine years. Apparently, however, that does not faze this Chancellor. He continues to force high interest rates, oblivious to the fact that they have little impact on credit but are very damaging to British industry and the exchange rate.
The key to the issue is the level of interest rates. A Government who pursue high interest rates show that they


are unwilling to forgo immediate consumption for the sake of future investment. Yet the role of interest rates is to make just that division and allocation of resources. High interest rates show a Government who want to encourage immediate consumption; low interest rates show a Government whose policy is to encourage future investment.
Interest rates have another function — to allocate income between those who hold assets and derive income from lending them, and those who want to use the national wealth productively to create new wealth. Interest rates inevitably and diametrically establish the priority of those who hold assets over those who want to increase our productive capacity. High interest rates are clearly a further and most damaging expression of that very disease about which the Chancellor has spoken from time to time, short-termism. A country that pursues a policy of high interest rates shows that it is not concerned about the need to invest in the long term or about those whose true vocation is to create national wealth; it wants to give priority to immediate consumption and to the holders of assets.
The effect of the exchange rate is exactly the same. By forcing up the exchange rate, every over-valued pound will buy more goods, usually foreign, than would otherwise be the case. Of course, it is attractive to Governments to offer a higher standard of living in the short term, but that cannot be sustained in the long term. We shall have to pay a severe price for that short-term gain.
Ricardo, an economist with whom I do not always agree, said many decades ago:
If we sell our goods at a high money price and buy foreign ones at a low money price, it may well be doubted whether this advantage will not be purchased at many times its value, for to obtain it we must be content with the diminished production of home commodities.
That is an exact summary of what the Government's policies will produce. We will buy in cheaper foreign goods and derive a short-term advantage, but with the consequence of shutting British factories and throwing British workers out of work. That is the hallmark of a policy that pays no attention to the future, but is instead solely concerned with the immediate gratification of those who want to consume to the highest limit that the Chancellor can make possible.
This Budget is not just immoral or offensive, or one that fails the NHS or that fails to invest; it is an anti-productive Budget that takes its place in the context of an anti-productive strategy. It reinforces the divisions that prevent all our people from making their proper contribution to the creation of our national wealth. It encourages ostentatious and short-term consumption at the expense of investment. It encourages the very short-termism that the Chancellor has criticised. It shows a lack of care for the future which is the very antithesis of what a prudent Chancellor would be expected to show.
It is a Budget for the rich, but also for the irresponsible —and not the least irresponsible is the Chancellor who introduced it last week. The Prime Minister proclaimed that the Budget would be the epitaph for socialism—we shall see. It is certainly a celebration of greed and selfishness. If that is the ground on which the Prime Minister and the Chancellor wish to fight, we are ready to trust that matter to the common sense, better instincts and good conscience of the British people.

Mr. Edward Heath: After the Budget the Chancellor has every right to look satisfied with his reputation as a great reformer of the structure of our taxation system. He has every right to look satisfied, and he never hides it. I commend him for the changes that he has made in the structure, because they continue the process of himself and his predecessor, and for that matter his predecessor in 1974, whom he helped to prepare his plans. His Budget has done an immense amount to improve the structure of our tax system.
I suppose that one aspect that will last longest and will always reclaim his fame is the change for married couples. It is not an aspect of which I have any personal experience, but I am told that it will give great satisfaction, and my right hon. Friend has been absolutely right to make that change. My right hon. Friend is quite right to have made various changes to block up the loopholes and escape exits in the tax system, and I fully endorse them.
I fully agree with writing off the system of capital gains until 1982. However, I do not know whether I am quite so sure about combining capital gains with income tax. I must reveal my doubts on that. It seems that in capitalist economies we are always differentiating between capital and income, and we are now combining the two. I cannot see that that simplifies the administration very much. The problems of checking on capital gains will still remain. I have grave doubts whether it is right in principle to combine income and capital gains in that way. Perhaps in replying to the debate my right hon. Friend the Chancellor will be able to convince me of that.
Those are all excellent measures in the reform of the structure of taxation. The controversy arises not so much about the structure — there was little criticism of the structure from the hon. Member for Dagenham (Mr. Gould)—as from the level of the taxes that have been achieved inside the structure.
I advise my right hon. Friend the Secretary of State for Employment, who opened the debate, that he would do more to help me and our supporters in the country if he were to concentrate on the raison d'etre for the specific rates of change, rather than spend his time abusing the Opposition of long ago. I must confess that I find it very difficult now to concentrate on what Mrs. Barbara Castle did or did not say, let alone what she did or did not do decades ago.
I have always objected to what Lloyd George did in the coalition directly after 1919, but I have never held it against the present leader of the Liberal party. I have always believed that one of the most foolish decisions ever taken was by Mr. Churchill to go back on the gold standard at a rate of $4.85, which he could not sustain, in 1925, but I have never blamed my own party particularly for that foolish action. It would help all of us if we had rather more weighty arguments on the exact nature of the change of taxation inside the Chancellor's structure.
I must make one thing plain—I am not opposed to reductions in taxation. I refer to an article in The Economist this week, which displays that bigoted ignorance that is now so characteristic of The Economist and the reason why it has become purely a table magazine for would-be intellectual hostesses in the United States. It states:
Mr. Edward Heath, who, as Prime Minister, presided over top tax rates of over 90 per cent., sourly dismissed the changes as 'way over the top'.


That displays the most remarkable ignorance by those who write for what was once a great and distinguished paper. In fact, the first Budget in the Government of 1970–74 immediately cut tax rates—

Mr. Neil Hamilton: That was a long time ago.

Mr. Heath: It is nothing like as long ago as Mrs. Barbara Castle — [Interruption.] If my hon. Friend wishes to support the ignorance of The Economist, he should kindly do so—it would not in the least surprise me.
What I want to point out is that we reduced taxation in that Budget. If my hon. Friend wants to come up to date, what is even more relevant is that in 1973—the end of our period of office— the proportion of GDP taken by tax was 32·4 per cent. If my hon. Friend wishes to supply the figure for today, he will know that it is 37·5 per cent. This shows that at that time a substantially smaller proportion of the gross domestic product was being taken for taxation than is taken today. I hope that my hon. Friend will now acknowledge that, but not by intervening.
Therefore, the Chancellor will recognise that there is still considerable progress to be made, even though he himself may not be prepared to make it.
When we come to the relationship between the rates, one asks whether it is right to have gone to 25 per cent. and, so drastically, to 40 per cent. That is rightly a debatable question.

Mr. Nigel Griffiths: Will the right hon. Gentleman remind his hon. Friend the Member for Tatton (Mr. Hamilton) that under the last Labour Government the effective tax rate was 34 per cent.?—[HON. MEMBERS: "That is history."]

Mr. Heath: It may all be history, but at least it bears relevance to what is being said today and to my right hon. Friend's speech, although if it is part of history I am surprised that he did not use it in his speech.
When we come to the debate on the rates, we must recognise that today there are still 2·5 million people unemployed. How can they look at the Budget for any benefit? According to the European Economic Community, 7 million people in this country live below the level that is described by the Community as the "decency threshold" for people living in Europe as a whole. If we have more than 7 million people below the threshold of decency, and 2·5 million people unemployed, that raises the question whether measures could have been taken in the Budget to help those people. I believe that measures could have been taken in a variety of ways, by way of allowances, and that that need not have prevented the Chancellor from lowering the rate to, say, 45 per cent. However, I shall not vote against the Government because of that, because it is a matter of personal judgment.
My right hon. Friend the Member for Shropshire, North (Mr. Biffen), who is not in his place at the moment, explained that he would vote against the Government because he did not believe that the rate should have been reduced from 27p to 25p I find that argument difficult to understand. My right hon. Friend said quite frankly that he had never understood economics, which is a fact that some of us recognised many years ago. If he had said that

the dangers of cutting the higher tax rate from 60p to 40p were too great so he had decided to vote against the Government, it would not be up to me to complain.
I want to consider the general problems facing my right hon. Friend the Chancellor of the Exchequer, because he is facing a dilemma which many of his predecessors faced and it is necessary realistically to recognise the dilemma if we are to deal with it properly. The fact is that we now have great consumer demand and as a result we have increased both production and productivity. The Chancellor himself asked how long it could continue. We must ask that, because, although we have 2·5 million unemployed, we lack skilled labour, and the labour available is not in the right place for employment. Unfortunately, those two problems have characterised this country for many years and we have still not come near to solving them.
If there is a responsibility on the Government, it is to take urgent action to train far more people in the skills that are necessary for them to fill the vacancies available. [HoN. MEMBERS: "Rubbish."] I hear some helpful hon. Friends saying, "Rubbish", but the core of the problem is that we lack skilled people and the unemployed are where the demand does not exist. Why? Because the housing is not available where demand exists. This problem has faced us before. The dilemma now is that all too many steps are being taken to ruin the environment by providing more housing, rather than to deal with the problem by placing industry where labour and trained people can be.
Naturally, my right hon. Friends are right to emphasise the trade union problem that we have seen in Dundee. I hope that that can be speedily settled, and I understand that there are possibilities of that.

Mr. Nicholas Budgen: I am grateful to my right hon. Friend for his observations about industry and housing, but is he in favour of some form of direction so that industry is forced to go to areas where there is labour?

Mr. Heath: I do not know why my hon. Friend, who has known me for many years, should ask such a stupid question. Never in my life have I been in favour of direction. I was the Minister in the 1959 Government who abolished conscription.

Mr. D. N. Campbell-Savours: What about the Housing Finance Act 1972?

Mr. Heath: The last thing that I want to see is any form of direction of labour. But—[Interruption.]

Madam Deputy Speaker (Miss Betty Boothroyd): Order.

Mr. Heath: I want to raise the basic question of what will face us in future as a result of the Chancellor's policies. There will undoubtedly be increased consumer demand.

The Chancellor of the Exchequer (Mr. Nigel Lawson): indicated dissent.

Mr. Heath: The Chancellor shakes his head. I do not see how he can say that that will not be the case, even with a reduction of 2p in income tax. Even if all those who will get a reduction in income tax from 60p to 40p invest every penny of it, I do not see how that will prevent an increase in consumption.
We have an undeniable tendency to import more and more when there is more money available. Even now we


are faced with the problem that if we did not import our industry could not meet the demand because we do not have the skilled labour, or the labour in the right place, to meet the increased production necessary for the increased consumer demand. That problem will face the Chancellor, if not this coming year, then his successor next year or the year thereafter.
How do we deal with that? My right hon. Friend the Secretary of State emphasised the need to deal with inflation and said that 3 per cent. is far too high. The way to deal with inflation is to allow sterling to rise. That view may be being expressed privately in the Government—these things leak out. The more that sterling rises, the more difficult it is for our exports to be maintained. Let us never forget what happened in 1980–81, when sterling rose to $2.20 or more. That destroyed much of the industry which today could otherwise meet the consumer demand that will result from this Budget.
Let us never forget what happens when sterling reaches that level. It is a way of keeping down inflation, because when we import and allow sterling to rise the price of the goods remains about the same, but it now damages our export industry. At present, sterling is 51·85 on average, and that is too high for our exporters. Moreover, according to reports from firms, it is reducing their profitability because of what they receive in the transfer of dollars to sterling. Some of our great firms are reporting reductions in profits purely because of the movements on the exchanges of the dollar-sterling rate.
The Chancellor faces a dilemma. He can let sterling continue to rise, in which case it may help him to control inflation but will put more British businesses out of operation and damage our exports, or he can keep sterling stable, in which case it will remain too high, or he can reduce sterling by reducing our interest rates, in which case there is the risk of increasing inflation, which will affect selling. The Chancellor wants to maintain stability, and I strongly support him in that. He must get sterling down further and join the European monetary system. We know that the Bank of England and the Treasury want that, and I believe that my right hon. Friend the Chancellor wants it. That is the test. He should take sterling into the EMS. That would help our stability, by preventing sterling from rising too high and, if the balance of payments continues to deteriorate, from beginning to fall against his wishes. These are genuine dilemmas in handling the economy. It is not right to allow sterling to keep on rising. It should come down in order to help our exporters.
We are now in an international system in which it is impossible to prevent an inflow of money into the country. That makes nonsense of monetary figures, targets and limitations, if any remain. This, again, can be handled only by interest rates. If the Chancellor does not want the money to come into the country, he must reduce interest rates to reduce the effects of monetary expansion on the system. At the same time, he runs the risk of inflationary rises in prices because of imports, whether of raw materials or of manufactured goods, entering at higher prices. That is another dilemma. This is all a question of the management of the economy.
What is left to the Chancellor to manage the economy is only the interest rate. He has discarded taxation as a means of dealing with the demand that is created among consumers. He has nothing left except the interest rate. That is why it is crucial, and why it is tied to our membership of the EMS.

Mr. Ian Gow: Does my right hon. Friend agree that another weapon in the hands of the Chancellor is to diminish public borrowing or to repay debt? Could he bring himself to pay tribute to my right hon. Friend the Chancellor for having been the first Chancellor for many years, not only to repay debt of about £4 billion this year, but to budget for a £3 million repayment of debt in the coming year?

Mr. Heath: I am strongly in favour of that, but the consequence can be damaging. Unless the money is reinvested, or paid abroad, it becomes consumer money. If the Chancellor repays debt in the ordinary sense, the money is going into some system. The question is whether it will be used for consumption or reinvested. If we assume that it is reinvested, he is right to repay debt.
I shall make two suggestions to the next reforming Chancellor. First, having reached the stage at which great earnings can be made in this country —my right hon. Friend said that we have one of the lowest rates of taxation in the industrial world — the Chancellor has a responsibility to deal with family trusts. This is the system—it does not exist in the United States, Japan or some other Western industrial countries — whereby great estates can be handed on from generation to generation, with no taxation, or minimal taxation. With a system in which, in contemporary ways, one can create great wealth, there is no justification for maintaining a system in which, having made that wealth, one can hand it on from generation to generation without any generation doing anything about it. That will not appeal to my right hon. and hon. Friends behind me, but it will become a basic tax structure issue. That is the first matter that a radical reforming Chancellor should tackle. Of course, it will bring in considerable revenue.
Secondly, the Chancellor should opt for the tax credit system. It will be beneficial to us. It means combining allowances and taxes and operating under one system. It was always calculated that computerisation would save 20,000 personnel. I still believe that that is desirable, and I hope that the next reforming Chancellor will devote his attention to it. It will need further simplification of the system. It will enable the Chancellor to focus on what is required to help poorer sections of the community and to deal with them through the tax credit system. He will then be fully justified in saying that he reduced the overall maximum tax level to something that is reasonable in modern times, that he changed a great deal of the tax structure, and that his successor is carrying on with the reform of the system of family trusts. If he prides himself on having stopped some tax loopholes — family trusts are by far the biggest of all tax loopholes — he will introduce a tax credit system.
I hope that the next Chancellor will do those things. In the meantime, I hope that the risks inherent in the Budget—encouraging though the structure is—will prove to have been taken rightly, that we shall not find inflation increasing, that we shall not find a great consumer boom, and that we shall find our industry and skilled labour force rapidly expanding. Unless that happens, there are grave risks of being forced into other activities.

Mr. David Steel: I have undertaken to keep my remarks extremely brief. Therefore, I am grateful to the former Prime Minister, the


right hon. Member for Old Bexley and Sidcup (Mr. Heath), for not expecting me to defend the decision of Mr. David Lloyd George or anybody else of similar vintage. As I shall mainly be critical of the Budget judgment, I shall begin my remarks by making two statement of appreciation of Budget decisions.
First, I refer to the decision regarding taxation of married couples. The Liberal and Social Democratic parties fought not only the last election but the one before it on that issue. We welcome that long-overdue change.
Secondly, I refer to forestry. I speak not only on behalf of a party that is concerned about the environment, but, obviously, with extensive constituency interests. The change from dependence on tax avoidance measures to planting grants is extremely welcome. We look forward to the details of the planting grants being announced, and, in particular, the hint contained in the Chancellor's speech about the way in which planting grants will be used to encourage the development of broadleaf as well as conifer planting.
With those two exceptions, the Budget judgment is sadly deficient.
In her speech to the Conservative party at the weekend, the Prime Minister said:
Most people don't manufacture their own morality. They take it from the culture in which they live.
She went on to talk of the responsibility of leaders. Our young people live in a culture whose values are being warped by the kind of judgments in last week's Budget. The Prime Minister herself said:
No one would have remembered the Good Samaritan if he'd only had good intentions. He had money as well.
In an unscripted answer to a television interview question, the Prime Minister said:
Society. There is no such thing as society, only the individuals who comprise it.
I give the House a more up-to-date word on the same lines from a junior Minister in the Scottish Grand Committee debate this morning in Edinburgh. Talking about private sector education, he said:
Parents exercise choice with their cheque books.
I suspect that much of the thinking behind the Budget is that more and more people shall be able to exercise choice with their cheque books and that more and more people should be enabled to buy their way out of the inadequacies of the Health Service and the education system. Because of that basic judgment and the basic purpose behind it, we are strongly opposed to the Budget. Indeed, one wonders why, when community care provisions are sorely stretched, the Government should choose this year to abolish the dependant relative's allowance. I should have thought that we would want to give every encouragement to people to look after their relatives in their own homes whenever possible. We want choice for all, not just for those who can afford it. That is why the Government should have concentrated on maintaining public services at a level of which we could all be proud.
The Budget is severely redistributive in an upward direction. It is always better to give specific examples than to talk in generalities. Today, a married man on a low income of £100 a week with two children takes home £96 a week. But, after the tax changes in the Budget and the social security benefit changes that have already been announced, that man's take-home pay will be down to £87

a week. That reinforces the call of the right hon. Member for Old Bexley and Sidcup for a tax credit system, to which my party is committed. It will not only be more efficient and cheaper to administer, as he rightly said, but more just for individuals who are still caught in the poverty trap.
Of course, the Chancellor's Budget is only half the story. Much of the downside of finances for the less well-off was announced before the Budget. I refer to eye test charges, dental care charges, and the prescription charge increases that were separately announced. Of course, many of the changes that affect individuals form no part of the Budget. So it was that, in my constituency surgery this weekend, a lady came to me and showed me her pension book. She showed me how the calculated increase in pension to which she and her husband were looking forward was already swallowed up by the circular letter that she held in her other hand. It was a rent increase demand from the Scottish Special Housing Association, which, again, is under financial pressure from the Government. That is an example of someone, even with the promise of a pension increase, whose standard of living will be reduced.
We can now perceive that, in the warped culture in which we live, the number of rich individuals will increase—I do not dispute that—but they will live in an impoverished society, in which the crime wave will continue at its present level, squalor will not be eliminated, and in which there will be an increase in drug addiction. Such things are consistent with those parts of the country in which chronic long-term unemployment still exists.
My party supports an enterprise culture. The great majority of British people not all—support an enterprise culture. But it is an insult to suggest that, because they support an enterprise culture, they do not also support a culture that is fair and just. The emphasis that is placed by the Budget and by much of the Government's philosophy on acquiring more money is one of the reasons why we have seen an enormous leap in the scale of personal borrowing in recent years. Last year alone, personal credit was up 18 per cent. As has been rightly said, that results in the sucking-in of more imports.
The Government are guilty of creating a society in which it is thought to be easier to make money than it is to earn it in manufacturing. In the Budget, the Government should have done four things to encourage British manufacturing. The first concerns exchange rate fluctuations—in fact, almost deliberately increasing the pound rate. It remains a mystery why the Prime Minister has some sort of personal veto over our entry into the exchange rate mechanism of the European monetary system. The Chancellor now at least appears to be a convert to this, but I do not understand how the Government can be committed in principle to the completion of the internal market by 1992, and yet not take the step, which is in our interest, of joining fully in the exchange rate mechanism. It is high time that that was done, in the interests of our manufacturing industry.
Second, and here I agree again with the right hon. Member for Old Bexley and Sidcup, we have among our 16 to 25-year-olds a greater proportion of the unskilled than is the case in any of our competitor countries. That has been acknowledged in some of the speeches made by the Secretary of State for Employment, and I am glad to see him nodding. Are we doing enough to bring training and education together, and to invest more in making sure that that age group has more access to all forms of higher


education? It is a constant complaint of modern manufacturers that they are finding skill shortages, even now, when there is a large pool of unemployed.
Third, the Government have been grossly neglectful in failing to take any measures to deal with the regional imbalances and disproportions in unemployment. Why is it not possible to reduce the national insurance contribution on a regionally varying basis in areas of high unemployment, to encourage people to take on more workers in the areas that are suffering most? Why is it not possible to do the same with corporation tax, to place more total investment at a regional level? I have some doubts about the changes in the regional development grants which the Government have announced, but I can accept that there is some logic in them, provided that the total resources available for regional development are to be kept going. We suspect that they are not.
The House has been greatly entertained by the exchange of public correspondence between the Secretary of State for the Environment and his predecessor the right hon. Member for Henley (Mr. Heseltine) as to which of them is the more responsible for the destruction of the environment of the south-east of England. Underlying all the correspondence is an assumption that I do not accept, which is that the economy of the south-east has to be overheated anyway, and nothing can be done about it. Without going into the absurd propositions about the direction of industry, I can say that something can be done about it. If more investment were steered towards the north, Scotland and Wales, a great cheer would go up from many of the communities in south-east England, which find that they are suffering from the pressure of people and resources and new developments in this one corner of England.
Fourth and last, the Government should do much more to encourage profit-sharing and industrial partnerships than they have done in this Budget. It is significant that we had a great success in the Nissan plant in Sunderland, where there is a single union, single status and a cooperative system of production. That is the industrial relations for the future. It was lamentable that the hon. Member for Dagenham (Mr. Gould), speaking for the Labour party, had nothing to say about the 1,000 jobs lost in Scotland through the failure to introduce precisely the system which exists in Sunderland, where trade unionism is alive and well, and people are enjoying prosperity. That is the pattern of the future, and the Government should have done more to encourage it.
We shall vote against the resolution on income tax rates because, in the truest sense of the word, this is an antisocial Budget, produced by an anti-social Government, and they should not be surprised if it continues to have anti-social consequences.

Mr. Terence L. Higgins: I shall begin by taking up two of the points that have been raised by Opposition Front Bench spokesmen. It was noticeable that, in their remarks about income tax, they tended to concentrate on the reduction in the top rate of tax from 60 to 40 per cent. and skilfully ignored the reduction in the standard rate, and the fact that the threshold has been raised twice as much as would have been required merely by indexation to account for the cost of living. I tried to recall in how many Budgets introduced by the previous Labour Government any such reduction in taxation at the

bottom of the income tax scale took place. It is a fact that by those standards this Budget, even if one takes that tiny segment of the concessions that my right hon. Friend the Chancellor has given to standard rate income tax payers, is a success.
The other point that it is important to stress is that there is undoubtedly a flaw in our system of considering economic matters with a division between the raising of taxation and the expenditure of it. The public at large do not understand that the Budget presented by the Chancellor is concerned only with the raising of taxation and not with the spending of the money that has been raised. It is tremendously important, since the Opposition have put so much stress on the National Health Service, that this Budget should be seen in the context of the public expenditure White Paper, published a few weeks ago. As my right hon. Friend the Chief Secretary pointed out, that involves an increase of £1 billion this year, £1 billion next year and £1 billion the year after.
I do not recall any Labour Government making such an increase in funds for the NHS. Furthermore, I hope that when the nurses' pay claim is decided, which should be before the end of April, the Government will fund whatever settlement is agreed in full. That will involve a further charge on the contingency fund, which itself will be a substantial increase in the expenditure on the Health Service.
This division between expenditure and taxation presents many problems, although I note with interest that Mr. Sam Brittan took up this point today. It was made many years ago by the Armstrong committee, and the Procedure Committee (Finance), which I chaired, examined it closely. In future, we should consider bringing together more closely the two sides of the measures.
I greatly welcome other measures in the Budget, not least the removal of discrimination against marriage which I know, from experience in my constituency, many groups, not least those involved with the Church and so on, have been advocating for many years. At last, my right hon. Friend the Chancellor has managed to do something about it, albeit with some delay in some of the proposals.
There are so many aspects of the Budget that it is difficult to know on which to concentrate, but I shall concentrate on two. One which has been neglected because it is so traditional is the increase in indirect taxes, notably that on tobacco. This puts into context the Government's attitude to the proposals coming from the EEC with regard to the approximation of indirect tax rates. I am passionately in favour of the single market and I believe that 1992 and the move towards it will give this country many opportunities, which I hope we will be sensible enough to take.
That being so, it is important, if one is enthusiastic for that opportunity, as I am, to disagree with proposals that seem unnecessary or perhaps even damaging. I am struck by the evidence given recently by Lord Cockfield with regard to the proposals for harmonisation of indirect taxation within the EEC. It was significant that he seemed far more preoccupied with the removal of customs barriers and transit between one country and another—when clearly, because of the Channel, the United Kingdom is in a somewhat unusual position — than with getting a system of indirect taxation which was the best that could be devised. He admitted as much when he said that we wanted the easiest way to get agreement, when the right


approach should be to argue that we should decide what is the most appropriate system of indirect taxation and then seek to achieve it.
The report of the Select Committee on the Treasury andCivil Service, which was published a few days ago, stressed that there is a danger that the moves towards the approximation of indirect taxation run across the use of a tax system that may be designed for social or health reasons. From that point of view, there may be a case for not going along the route of approximation with regard, in particular, to excise duties. Therefore, I noted with great interest that in his Budget my right hon. Friend the Chancellor put up the effective cost of a packet of cigarettes by some 3p, whereas the proposals by the EEC would involve reducing the cost of a packet of cigarettes by 12p. This can be taken as a clear sign of the way in which the minds of my right hon. Friend and the Government are moving. But other important aspects of the move towards 1992 present opportunities without such disadvantages.
The move towards approximation of indirect taxes in the EEC without regard to whether the structure of those taxes could reasonably be regarded as good would cause serious problems, because once the rates are approximated and finalised by agreement there is no mechanism in the EEC for adjusting their level. That is a great deficiency, because it will mean that the rates are set in concrete. It will also have considerable implications for the management of Britain's economy, not least because a much greater weight will be thrown on direct taxation, over which we shall still have some control. We shall need to be able to take necessary fiscal measures now and probably for many years to come because of continuing differences between member states. The EEC proposals for harmonising corporation tax would give us even less scope for more fiscal adjustments. It is important to retain flexibility in that respect if a uniform system of taxation is not to be imposed, which will cause problems for some countries.
The other aspect on which I wish to concentrate is the Government's policy on economic management. I noted with interest my right hon. Friend's proposals for a balanced Budget, but one must take into account the large margin of error in estimating the public sector borrowing requirement. It was a significant change from last year, when he suggested that the PSBR should be 1 per cent. of GDP. I hope that that point will be clarified. I urge my right hon. Friend not to be afraid to say that policy has been changed. He has a slight tendency to say, as though it was a virtue, that there has been no change in policy. From time to time, changes in policy may be appropriate, and I welcome some of the changes that have been made.
In the run-up to the Budget, the exchange rate policy seemed to create much anguish in the press. The matter was grossly exaggerated on the basis of two answers to supplementary questions on the Floor of the House. There is no difficulty reconciling the answers given by the Chancellor and by the Prime Minister, but we must consider some important issues of exchange rate policy. The item that caught the headlines was the Prime Minister's remark that we cannot buck the market, but we should realise that the answer that she gave before that was entirely consistent with the remarks of my right hon. Friend the Chancellor of the Exchequer.
Of course, there is a market price for sterling at any given time and one cannot buck the laws of supply and demand, if that is what is meant by the market. But, as any student of economics knows, the laws of supply and demand are very different in macroeconomic policy from those in microeconomic policy. The famous diagrams associated with them are very different. The supply, price of and demand for potatoes is not the same as the supply, price of and demand for sterling or the dollar.
Although we cannot buck the market, by using the laws of supply and demand we can significantly influence the market and the price at which the dollar or sterling may operate. But we can do that in various ways. It can be done be currency intervention— throwing money at the sterling exchange rate or the dollar exchange rate. That is likely to be expensive, and it is difficult to buck the market in that sense. But that does not mean that we cannot seek—indeed, there may be strong arguments for it—some stability in exchange rates by co-ordinating interest rate and fiscal policy. I welcome the fact that my right hon. Friend the Chancellor has been active in that respect.
My right hon. Friend seemed to change his mind on the first form of intervention—going out into the market and buying or selling a foreign currency. It is clear from the outcome of the Louvre agreement that relying on intervention without sufficient co-ordination on interest rates and fiscal policies is dangerous. In that sense, too, it is difficult to buck the market. None the less, the measures that the Chancellor has taken in that respect are important and I hope that he will press on. I am sure that the Prime Minister wishes him to do so, as it was clear from her answer at Question Time that she wants to achieve more international co-ordination and stability in such matters. But it will involve co-ordination of all the points that I have just mentioned.
The Budget should be memorable because of the measures contained within it, but I fear that it will also be memorable for the events of Budget day itself. I was appalled by what happened. The House is often rowdy and noisy. There are often points of order and occasions when hon. Members react passionately and the noise reflects it. That is vastly different from mindless chanting clearly intended to prevent freedom of speech. It was greatly to be deplored, not least because it succeeded in its objective: the sitting had to be suspended and my right hon. Friend was prevented from making his speech. I hope profoundly that, on reflection, those who participated in the incident will realise that democracy is a fragile thing and that it is not easy to defend freedom of speech in this place. But it is incumbent on us all to make sure that we do.

Mr. Robert Sheldon: I agree with what the right hon. Member for Worthing (Mr. Higgins) said about bringing together debates on spending and the raising of revenue. We have had something similar, but we do not have the factual basis or the proper background to enable us to discuss expenditure and revenue at the same time.
Despite all that has been said about this reforming Chancellor, I expected more from him. As he has given so much of his effort to such matters, I thought that this time we would see something exceptional. I am not talking about our expectation of fairness, which we did not see in this Budget, or the complete disregard for anything other than a reduction of taxation on the rich and the almost


humorous justification for such discrimination. I had in mind a Chancellor who had had years of preparation for a Budget in which he could have achieved what so many of us wanted and what he must have wanted a year or two ago—to introduce the real reforms in taxation that would have marked him out for special distinction in matters that he used to consider important. They include mortgage interest relief, which is nonsense and a shameful blot on our financial timetable, the enormous reliefs that are available on personal pensions, the nonsense of stamp duties, and inheritance tax. I thought that he would have wished to turn his attention to those matters at this stage of his Chancellorship.
Of course, it could be said that a Chancellor of the Exchequer who has created such social upheaval in the redistribution of wealth to the rich has done more than enough in tax changes. But tax change is not tax reform, and the one does not inhibit the other. Those who believed that the light-burning in No. 11 which traditionally takes place before the Budget was the light of the tax reformer have been greatly disillusioned. As the Financial Times put it, the Budget was intellectually unexciting. But a proper analysis of these tax changes — and how much more could have been done — really ought to await the Finance Bill and the debates on it.
The political aspects of the Budget have been dominated by two matters: money for the rich, and the argument between the Chancellor of the Exchequer and the Prime Minister about the exchange rate. That argument really is important. It lies at the very heart of our economic management, and it is the critical test of the right hon. Gentleman's Chancellorship. Getting it right will determine the balance of payments, the promotion of exports, the discouragement of imports and the relationship of our economy to the world at large. In a word, it will determine the outcome more than anything else that the Chancellor is able to do. It represents the maximum of his power or influence. It is more than an economic indicator. It represents in itself almost an entire economic strategy. It is the one economic signal that can claim the privilege of keeping the Chancellor awake at night. The exchange rate is the precursor of trade patterns. It determines the order books of our most important industries, affects the level of unemployment and anticipates the real level of industrial prosperity.
As a lesson, we need only remind ourselves of what happened in the exchange rate madness of 1980–81, when so much industry was damaged and destroyed. As an example of what a disastrous exchange rate policy can do, I have only to turn to my constituency, where, in those two years, we lost one third of our manufacturing industry. This was not low-tech industry; it was not cotton, for instance. It was medium-tech. It involved skilled engineers and skilled engineering firms, producing articles that the whole world makes. They are made in Japan, Germany and the United States. Those firms were destroyed by the high exchange and interest rates. They could not sell on the home market or the overseas market, and they went to the wall. They will never recover or restart.
That was not unimportant, not just in Ashton, but everywhere. We saw a community with higher than average pay and lower than average unemployment—in the country as a whole, not just the north-west—suddenly turned to an area of high unemployment, low pay and all the problems of dereliction that compound those disadvantages.
When there is an argument about exchange rate policy between the Chancellor of the Exchequer and the Prime Minister, we are not talking about a bit more money for this, or a little less for that; a bit more on this tax, or a bit less on that tax. We are talking about the central economic issue of our country. On that, the Prime Minister has one view and the Chancellor has another. When the Prime Minister says, "You cannot buck the market", she is offering too simple a view, as the right hon. Member for Worthing pointed out. It is true that Governments must listen to markets, but it is also true that markets must listen to Governments. They interact, and a wise Chancellor uses the relationship to the benefit of our economy as a whole. In that respect, I believe the Chancellor to be right and the Prime Minister to be wrong. I think that they both started off with the same view, but the Chancellor has learnt and the Prime Minister has not.
At one time the Chancellor was even more extreme than the Prime Minister. He wanted to enable the Bank of England, through legislative powers, to decide these matters independently of the House of Commons. He held that view in 1977, and, although he may wince at the recollection, we can at least congratulate him on changing. The Financial Times says that the Chancellor of the Exchequer has jettisoned his "ideological baggage", and we as a House commend him at least in that particular.
Let me demonstrate the complacency of the present Government. Last week, when the Chief Secretary to the Treasury talked about the economic miracle—perhaps he will regret mentioning that again; we have had too many such false dawns—he joined the long list of those who, since the war, have awaited its coming with more hope than good sense. I must say that I find the exultations rather cloying, as well as the self-satisfaction that I see oozing from every statement. It seems that it is exceeded only by the Government's amnesia about the cause of the present economic position. That, as we all know, is North sea oil.
It is not the revenue aspects that are of such importance. It is the balance of payments aspect. From 1945 until 1980, what stopped the economy from growing was balance of payments difficulties. Stop-go was an illustration of those difficulties. Every now and again they brought to a halt all our expansionist hopes, whichever Government were in power, and, at a stroke, the balance of payments ceased to be the dominant economic factor in 1980.
What has happened since then'? We have had the disaster of the high exchange rate. More recently, we have had the boom in the high streets—a retailing windfall. Credit has never been so freely available, and our savings ratio puts us near the bottom of the table of major industrial countries. We now have a consumption-led boom, but we have been through this sort of thing before. We had it in 1955 and again in 1960, and—as the right hon. Member for Chesham and Amersham (Sir I. Gilmour) pointed out in a speech of great distinction—there are close similarities between now and the period between 1971 and 1973. The right hon. Gentleman could have added to his detailed list of similarities the property boom that is so disfiguring the housing market today.
This consumption-led boom could, of course, have taken place at any time since 1980. It did not have to wait for a year or two ago. The early factor that brought a halt to such policies in the past was the balance of payments. It is North sea oil which, uniquely in the present import


boom, has protected the balance of payments. In past surges of consumer expenditure there was at any rate some intellectual justification for it. Expand demand, the argument went, and our factories would produce more, unit costs would fall and exports would increase. The philosopher's stone for which we have been seeking would be to hand, and we would have export-led growth. But the present consumption-led boom has no hope of being transmuted into export-led growth.
With the internationalisation of trade in manufactured goods, as well as the exchange rate—which, on any likely reckoning, will not discourage such imports—all we shall achieve is more imports and an artificial feeling of well-being. If that happens, the so-called economic miracle, like all previous hopes, will have collapsed. The economic miracle—or, rather, our misuse of North sea oil—will have been shown to be nothing but profligacy, and as such will take its place at the forefront of a long list of missed opportunities.
That, I believe, is the likely outcome of this Budget. Far from its effects being limited, if the Prime Minister were to succeed with her high exchange rate policy, the problems later this year, or early next year, would be magnified.
This is supposed to be the Budget for initiative. It is the umpteenth Budget for that elusive virtue. It is strange that tax reductions for the rich are supposed to stimulate the creators of wealth. I thought that we had tested that theory almost to destruction in our post-war history. The wealth creators were expected to be stimulated by Selwyn Lloyd when he made his large reductions in surtax in 1962. The economic halt, as we know, came two years later. Anthony Barber tried again in 1971, with his unified tax, which was the largest tax concession to the wealthy that had been seen since the war. That, too, collapsed in ignominy two years later.
In view of the economic consequences of stimulating the rich, it might be concluded that disaster would invariably follow. What would certainly be perverse would be to assume that any economic benefits flow from such changes—let alone that the benefits will be remotely comparable to the social consequences of divisiveness, unfairness and a decline in our provision of essential services.
Of course, the benefits of this Budget for the rich do not go just to the creators of wealth; they go also to the inheritors of wealth. With the emasculation of the so-called inheritance tax, great advantages now go to those who are left large fortunes. I have no idea how this is supposed to stir the entrepreneurial instincts of those waiting for their relatives who are well off to pass on.
The difficulty for the Government lies in their inability to provide an intellectual basis for the relief of taxation of the well off. The assumption must be that, despite all the trumpets and fancy speeches, and all the posturing, they are just handing out the prizes. It is in their expenditure that the Government show themselves to be equally unfair. They talk about giving more money to the National Health Service. Many hon. Members know something about the relative price effect. It costs more to keep the National Health Service than increases at the level of inflation can provide.
Tameside general hospital, which is in my local authority area, had 5,800 admissions two years ago and

5,000 last year, but it will come down to 4,000 this year. That sounds bad, but it is even worse when one takes into account the fact that 3,000 of those admissions are emergencies. All that we had were 2,000 above the level for emergencies last year and 1,000 above the level this year. That is the scale of the deterioration of the Health Service of which I have personal experience.
The failure to increase child benefit is also distressing. Just over 10 years ago, in 1977, a compact was reached between Iain Macleod and the Treasury. The deal was that child benefit would not be treated as public expenditure subject to the disciplines of the public expenditure exercise. We were going from tax allowances to child benefit. Tax allowances were always raised. The agreement reached with Iain Macleod was that child benefit would not be included in the public expenditure exercise, but would continue to be dealt with in the way that tax allowances are dealt with. We have seen a quite shameful withdrawal from that agreement that could have continued at least to play an important part in limiting the problems of families on low incomes.
This is an unfair Budget. It is not a Budget that a future Tory party will be able to look at with pride. It will be an embarrassment to the Tories and will shame their successors. Sooner or later the British people will turn to more equitable ways of running the economy, and I hope that they will do that before too long.

Sir Ian Lloyd: I begin by congratulating my right hon. Friend the Chancellor on three counts. First, he has produced a splendid Budget, which will be the envy not only of his predecessors but, I suspect, of his successors. To have balanced the Budget, balanced our payments, repaid debt, reduced taxation dramatically, held inflation in check and created the general economic conditions favourable to growth and falling unemployment is a prodigious achievement.
Secondly, he has gone a long way to ensuring that the lessons for our economy, set out in such vivid illustration in Correlli Barnett's powerful book "The Audit of War", are learned and applied. Few would have predicted with any real confidence as recently as five years ago such a remarkable transformation. It has not been without pain or uncertainty and, as always, the faint-hearted would have given up when the going was tough. It is very much to my right hon. Friend's credit that he did not do so.
Thirdly, in a most decisive and convincing manner, my right hon. Friend has broken the mould of a high-tax, low-incentive, low-productivity economy from which successive Governments of all parties tried so hard to escape, sometimes with very much less success than they had hoped. He has done so because he is the Houdini, if I may put it that way, who has mastered the complex art of unlocking each of those massive locks that bound our economy in the iron bands of constraint, despair and interlocking prohibitions. He has broken out of this by seizing on the most promising and important segments of policy, and by defining the fundamentals and sticking to them. I salute him and recognise in him, as Napoleon once recognised in his generals, the truth that good generals are those whose skill is rewarded with luck. I suggest that the Chancellor's skill is quite exceptional this side of the second world war.
My main purpose is to concentrate on one argument, that the Budget has reduced taxation rather than increased


expenditure on the National Health Service. My right hon. Friend the Chancellor has come under considerable attack on this score, not least in today's debate and not only from the Opposition. He is right and his logic is equalled only by his courage. It is most uncongenial to be accused of lacking sympathy or compassion for the sick. As I understand it, the argument is that the National Health Service can demonstrate a shortage of staff, equipment and space. It is that hospital queues are lengthening, that there is a perceived shortage of most skills—especially of the most scarce medical skills—and that decisions are being made not on health but on financial grounds. Therefore, the argument runs that there should be no reduction in tax on anyone until a significant proportion of these needs have been met and the future of the Health Service secured. On the face of it, that is a plausible and in some ways a powerful argument.
I find particularly disturbing the suggestion that has been made over and over again in the past few weeks that this problem is unique to our Health Service and to the United Kingdom. The suggestion is that it reflects a unique lack of generosity on the part of the Government, and that there is a unique indifference to the plight of our hospitals and our medical profession. Those things are attributed by our critics uniquely to the Government. All that is unsustainable because the mass of description and anecdotal evidence, of which we have had a great deal, has failed both in detail and in terms of the general picture that has been conveyed to make a case.
What is the evidence that the problem is not unique? There are three principal organisations which in my experience have concentrated immense effort in recent years on the problem of world health in the developed and the undeveloped world. The first is the World Health Organisation. It has published a series of reports pointing out in the most dramatic terms that by the end of the century all the developed countries of the western world, whatever their present position, are likely to run into massive problems about financing their health services. No one has mentioned that.
Secondly, that superb body, the Organisation for Economic Co-operation and Development, has published a series of reports, specifically on health but more generally on social problems. In a moment I shall come to some of the conclusions in one of those reports.
Thirdly, the Office of Technology Assessment, which advises the United States Congress, has produced a series of reports on health that are of immense significance and value. The OTA has looked at a series of major health problems in the United States in relation to the Medicare system of payment and has concluded that there are no easy solutions and that such solutions have not been applied there or anywhere else. The problem of health is immensely complex and has not yet been solved.
All these reports have a series of common conclusions. I have touched on the first one, the immense complexity of the problem. The second is that there is general evidence throughout the western world of failure and concern, and that this applies in countries such as the United States, Sweden and Switzerland which apply the highest percentage of GDP, just as much as it does to countries at the other end of the scale. Thirdly, there is general evidence from the OECD and in the developed world of massive health cost overruns. It is not a problem unique to the United Kingdom or to our National Health Service, nor is it one that the present Government or any other

British Government have uniquely failed to solve. It is a general problem and I suggest that we have much to learn by looking at the experience of others and seeing what lessons we can derive from them.
There is no correlation — this is a significant conclusion — between the system of payment and the general success of a health service. The system is obviously one of immense variety, varying from our own, which is virtually a totally publicly funded service, to the United States, which has the highest percentage of GDP spent on health, but, in fact, spends only 4·4 per cent. in the public sector and 6·3 per cent. in the private sector. In France, where the figures are 6·5 in the public sector and 2·6 in the private sector, the OECD analysis again discloses many unsolved problems, particularly in the distribution of health skills throughout metropolitan France.

Mr. Campbell-Savours: Does the hon. Gentleman accept that there may well be a great body of opinion that simply wants to spend more as a percentage of GDP and that those people are not concerned with his arguments? They simply want the state to spend more, to raise standards and to increase the availability of services. Can the hon. Gentleman absorb that proposition?

Sir Ian Lloyd: There is always a vast body of public opinion which, over almost every segment of the public expenditure spectrum, wishes the state to spend more. I have never yet received large numbers of letters from constituents, especially those employed in the public sector, asking the state to spend less.
That brings me to my next point. There is no exclusive right of a national health service or the health sector in any country to absorb, as of right, increased resources which the growth of the economy is making available. It certainly has every right to put in a claim and to have the claim considered in conjuction with others. However, the argument being deployed here is that under the Health Service there is an absolute right, as soon as a surplus is created elsewhere which matches or exceeds its deficit, for that deficit to be met. That argument cannot be sustained. Health Service expenditure must compete against expenditure on defence, education and the environment, a total of £130 billion in public expenditure.
Health care may often be better achieved through other forms of expenditure. Some calculations have been made by the Office of Technology Assessment, which show that expenditure on safety, as a result of the high medical costs of accidents, could well improve the general efficiency of health services much more directly and effectively than direct expenditure in hospitals on the consequences of accidents. The same applies to expenditure on reducing pollution. Some precise calculations have been made in respect of the effects of reduced pollution on bronchitis and the consequent reduction in bronchitis costs. Those calculations were made in the United States, where the reduction in expenditure was calculated to be about $10 billion. That is a cost-effective way of going about things. I need hardly mention the effect of decreasing expenditure on alcohol and tobacco. The consequences of the consumption of alcohol and tobacco account for about 40 per cent. of all health expenditure in this country. There is no automatic entitlement of the NHS to funds. The NHS must compete. It may be justified in its approach in some cases, but not in others.
I should like to refer to a number of points made by the hon. Member for Dagenham (Mr. Gould). He said that


economic judgments were much better if they were not so confused with morality. He appeared to be saying that economic judgments were generally much better made if they were judged in some sort of moral-immoral spectrum. That is a fallacious way of considering such matters. We are considering two essential problems—social acceptability and economic growth. They are certainly interconnected. It is a fine and often difficult judgment as to which policy will optimise the U-curve between the two in a most complex and difficult manner.
However, in my judgment, it is not a question of morality. It can never be a question of morality or immorality. If it were a question of immorality, one must ask oneself, if it is immoral to lower tax rates, at what point does the immorality become acceptable? We can consider that equally from the other side of the political spectrum. At what point does it become immoral to raise tax rates to the draconian levels that have existed in this country and others? We know that those draconian rates have had what could be described as immoral consequences, but I prefer to describe them as poor economic judgments with poor economic consequences. Let us forget about bringing morality and immorality into the issue. There is no ethical criterion, but economic judgments about consequences should be made a proper ground for political disagreement between the parties and a proper ground for debate.
The hon. Member for Dagenham then suggested, in an attempt to elaborate his argument, that the rich are idle. He said that the rich would benefit from the Budget, particularly the idle.

Mr. Campbell-Savours: He did not say that.

Sir Ian Lloyd: I wrote it down at the time. He said that many of those who would benefit from a reduction in tax rates were not merely the rich, but the idle rich.

Mr. Campbell-Savours: That is different.

Sir Ian Lloyd: It may be different, but if the hon. Gentleman considers some of the so-called rich — for example, Ford, Nuffield, Carnegie, Morris, Hammer, Leverhulme, Hanson, Rothschild, Morita, Wolfson and Sainsbury—he will see that not one of them could ever be said to be idle. They may have made great wealth, but they made it by the sweat of their brow and the efficiency of their judgments. Let us forget about the question of benefiting the idle.
The hon. Member for Dagenham then said that inequality is inefficient. That argument may be valid in a limited way in certain circumstances, but, if one is generalising the argument, why has the Soviet Union staged a massive retreat at great political cost from the egalitarian state that it sought to create and implement? The hon. Gentleman should take such judgments into account before he makes statements of that degree of generality.
The hon. Member for Dagenham then referred to Professor Kenneth Galbraith whom I remember being quoted in support of a former Prime Minister, now Lord Rievaulx, and his Government. If one considers that in a limited sense, Professor Galbraith had a point, but, when one widens the analysis and area of judgment, one finds such examples as that which I found two or three years

ago. I went to the Rhondda valley with the Select Committee on Energy to look at coal mines. One of the things that impressed me was the relative poverty of the private housing. The area was poverty-stricken and in many ways depressing. Suddenly, we came over the hill and there was a splendid, vast glass structure. I asked, "What's that? Is it some new factory?" I was told that it was the Rhondda council building. There is, therefore, another kind of contrast, that between public affluence and private squalor, but there is not necessarily any argument for or against the Budget from that quarter.

Mr. Rhodri Morgan: The hon. Gentleman must have the wrong valley. I can assure him that the Rhondda valley council headquarters are in a building equal in antiquity to that of the majority of houses in the valley—in other words, about 120 years old.

Sir Ian Lloyd: I apologise to the hon. Gentleman if I have the wrong valley. There was certainly a dramatically large and expensive building some 20 miles further up the valley that I visited. I withdraw any aspersions that I may have accidentally cast on the Rhondda.
I wish to deal finally with the question of high interest rates. I was astonished to hear the hon. Member for Dagenham argue that high interest rates encourage consumption. When my overdraft rate goes up, I endeavour to reduce my consumption. When the building society rate on mortgages goes up, the net effect on a fixed income is to reduce the available income and, therefore, to reduce consumption. The hon. Gentleman went on to say that that discourages the type of investment that we most want to see. Again, as most major industrial investments involve elaborate discounted cash flow analyses, in which the rate of interest is a crucial factor, one of the significant effects of high interest rates is to encourage more discriminating investment.

Mr. Dafydd Wigley: Oh!

Sir Ian Lloyd: If money is cheap and free, anyone can borrow and get hold of it. If money is expensive and scarce, obviously it is much more difficult to borrow and those who do borrow must consider much more carefully their approach and how they will spend that money.
I repeat that I heartily approve of what my right hon. Friend has done and I hope that he will be here next year to do it again.

Mr. Tom Pendry: I am extremely pleased to follow my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon), the previous speaker from the Opposition Benches, because he referred to the damage that the high interest rates policy of earlier years had done to his constituency and to mine. We have not yet recovered from that damage. I wish to concentrate my remarks upon that policy. It is a relatively narrow policy, but it is an important aspect of Government thinking and it is one to which the Chancellor should have addressed himself in the Budget.
I can state categorically that last Tuesday was not "Super Tuesday" for my constituents. At the weekend, the Prime Minister used just that expression a few miles along the road from my constituency and how she had the nerve to do so I will never know. It is just as well for her that security was drawn tight at Buxton. Clearly the hand


picked audience were beneficiaries of the Chancellor's lopsided, rich man's Budget. She certainly would not have got away with saying such things further along the road in Tameside. The Budget has done nothing for the vast majority of people and it has certainly done little for the people of Tameside.
The much-vaunted inner city policies of the Government have hindered the development of trade and industry in my constituency and that failure is repeated in many similar areas. My local council, as my right hon. Friend the Member for Ashton-under-Lyne would testify, is a well-run council. It is doing a great deal in line with what the Prime Minister has urged councils to do in her introduction to that glossy piece of fiction "Action for Cities" which was launched only two weeks ago. The Prime Minister wrote—perhaps it was Bernard Ingham or perhaps they worked together—in that document:
The Government is resolved, in partnership with the people, to generate that hope and help to create a new, lively environment in which to live, work and prosper … the Government has created a climate which supports enterprise and has set about removing obstacles in the way of inner city recovery.
That is nonsense to Tameside, whose situation does not square with the Prime Minister's words. By any yardstick Tameside is recognised as a deprived area. Indeed, its problems are recognised by all the political parties in the borough. I should like to draw special attention— I am sure my right hon. Friend would join me—to the leader of the Conservatives on the council, Councillor Bell. The Conservatives on the council, with one exception—an unsuccessful business man and failed parliamentary candidate—are at one with the majority party and with the business community in pressing the Government for help for the varied problems of the borough.
The three Members of Parliament with constituencies within the boundaries of Tameside have worked hard to bring Ministers to the area and have sent deputations to Ministers in Whitehall to present the problems of Tameside.
The hon. Member for Rossendale and Darwen (Mr. Trippier) was the latest Minister to visit the area. The leaders of the majority and minority parties made it clear to him that there was a true partnership scheme—not one of the glossies—in operation. It was a true coming together of the private and public sectors of the borough with the aim of generating the local economy. Those involved in the scheme believe that Tameside has many of the problems of the inner city — decay, dereliction, eyesores, empty factories, crime and run-down housing. The Minister must have been convinced by the determination that exists to tackle and resolve the problems. I am sure that he was especially convinced by the senior representatives of nationally-known companies who told him that they were as united and determined as anyone else to make the partnership work. However, when the Minister returned to Whitehall, he and, therefore, the Government turned their backs.
Tameside does not fall within the boundaries for urban aid that were drawn up a decade ago, so the borough is deprived of the assistance that it needs and it is ignored. Why did the Budget not address the problems faced by Tameside? Why are Tameside and similar areas considered irrelevant to Government philosophy?
Local business men, many of whom the Parliamentary Under-Secretary of State for the Environment met, are baffled about why their ideas for expansion have been

stopped by Whitehall's red tape. Projects that are attractive to private investors and that would benefit urban regeneration are coming up against a Government brick wall. The Government are letting the spirit of enterprise flounder. Instead, they are producing glossy brochures and an abundance of new logos.
One glaring example of Whitehall red tape was witnessed by the Under-Secretary. A pharmaceutical factory in my right hon. Friend's constituency straddles the boundary between Tameside and Oldham. It was pointed out to the Minister that, if that company moved its postal address from one building to another —situated on the Oldham shde— it would be eligible for inner city status. The company was baffled by that. It asked the Minister about it, but nothing was done. I defy any hon. Member to go round Oldham and Tameside and say that there are any differences in the problems that they face. They are both worthy of Government support. Indeed, Tameside has a worse unemployment record than Oldham. My purpose is not to diminish the claims of Oldham or any other area for Government help but to highlight my council's case.
On the Department of the Environment's own figures for social stress, Tameside scores higher than at least five of the north-west boroughs that enjoy urban area status. In the past four years unemployment in Tameside has increased at a faster rate than in nine boroughs that receive support. Financial resources are also tighter in Tameside because of its low rateable valuation in comparison with neighbouring boroughs and that is a clear reflection of the poor status of the area.
One point that is often overlooked is that Tameside not only has the economic problems of the scale of the city of Manchester, but has them in population terms as well. Tameside contains several overspill estates and, in the main, people have been rehoused there from Manchester's inner city. The estates of Hattersley, Carrbrook and Haughton Green in the constituency of my hon. Friend the Member for Denton and Reddish (Mr. Bennett) contain a population of about 13,700. Many of those people still work in the city of Manchester and if they lived a mile along the road they would qualify for help.
I want the Government to recognise that my local authority is playing its part on partnership and regeneration. It has done so without Government help. However, that authority needs help if it is to fulfil its wishes and if it is to achieve what the Government claim they want such authorities to achieve.
The authority has provided houses for sale and vigorously tried to improve older housing stock; land has been sold to private developers at subsidised cost; efforts have been made to improve the infrastructure, especially the shopping precincts, and it has introduced many other schemes.
On top of its economic problems, the deprived constituency of Tameside faces further cuts in health care. In the two Black reports Tameside was described as being in the top 10 most deprived areas of the country in terms of health provision. Tameside general hospital — my right hon. Friend the Member for Ashton-under-Lyne has said somthing of this already—is to cut 90 acute beds and 16 children's orthopaedic beds. A hospital has effectively closed without the Secretary of State's permission to date. Twenty-five general surgical beds are to be kept open for three months only.
I accept that I have made a constituency speech, but I do not apologise for that. Tameside is typical of many areas and the Budget has not addressed the problems in those areas. I state candidly to the Minister that he must respond to the points made by me and my right hon. Friend the Member for Ashton-under-Lyne about our area. Our constituents look to the Government to help them with their difficulties. If this Government will not help, our constituents will look forward to the day when we have a Government who recognise the problems and are prepared to do something about them.

Mr. Cranley Onslow: I want to be brief and I hope that the House will forgive me if I pick up the points made by my right hon. Friend the Member for Worthing (Mr. Higgins) at the end of his speech.
I begin by referring to the events on Tuesday when our debate began. I agree with my right hon. Friend that the organised tribal chanting was a disgraceful exhibition. The lack of action from the shadow Leader of the House or the Opposition Chief Whip to restrain those who were responsible for that disgraceful breach of order says much about the ability of those people. Perhaps the House would benefit if they would make way for others. If they will not make way, would they at least please stop obstructing the establishment of the Select Committee on Procedure which could consider these matters which must be examined?
There is an aspect of the disorder in which the hon. Member for Banff and Buchan (Mr. Salmond) succeeded in getting himself suspended which preceded the chanting which should not pass without remark. As you were in the Chair at the time, Mr. Deputy Speaker, you might be interested in the names in the Division list on the motion to suspend the hon. Member for Banff and Buchan. Most of the names will not have caused you surprise, Mr. Deputy Speaker. However, the presence of the hon. Member for Cunninghame, South (Mr. Lambie) on the list might have surprised you.
I gave notice to the hon. Member for Cunninghame, South that I intended to raise this point and I am sorry that he is not in the Chamber. I believe that the hon. Member is a member of the Chairmen's Panel. Members of that panel have a duty to support the Chair. It is entirely reprehensible that the hon. Member for Cunninghame, South chose not to support the Chair and he should be brought to account for that. I have no wish to go further into that matter as I have made my point.
I agree with the compliments paid quite rightly to my right hon. Friend the Chancellor of the Exchequer for his Budget. I want to focus closely on a point that has been referred to off and on from the beginning of the debate, which is the extent to which my right hon. Friend the Chancellor has prudently made provision for what may be expected to happen in the next few years.
Too much of the debate has been harking back. We could hark back a long way if we wanted to. As I listened to the right hon. and learned Member for Monklands, East (Mr. Smith) and his Front Bench colleagues, I was reminded irresistibly of a colourful card that I was given by a constituent during the 1970 general election campaign. That card dated from the 1920s and was headed "The Socialist Creed". The card read along the lines,

"Brothers" — it may have been "Comrades" — "let us combine among us and when I have spent my share we will do that again." The right hon. and learned Member for Monklands, East presented himself in the typical guise of one of Socialism's big spenders. All his answers to the problems confronting our society were, "Spend, spend, spend."
I do not believe that we can hope to compete in the world if we adopt that philosophy or if we ignore the effects of the years that the locusts have eaten or if we decide to squander in one great round of national self-indulgence the achievements that have been built up since 1979. If we do that—and that appears to be what the Socialists want us to do — we will be in the worst position to face the future.
My next point concerns another matter raised by my right hon. Friend the Member for Worthing. I want to consider what happens between now and 1992 and the advent of the single European market. Apart from the Budget, the most important economic event last week was the launch on Friday by my right hon. and noble Friend the Secretary of State for Trade and Industry of the campaign to familiarise more people in British business with what will happen in 1992. In the covering letter, which I hope has reached all hon. Members, my right hon. and noble Friend states:
Over the next five years we shall see the dismantling of the remaining barriers to a single unified market of over 320 million people in Europe. All Member States are committed to achieving this by the end of 1992. I want to ensure that companies throughout the UK are given every chance to make a success of the new opportunities of the Single Market and to meet the challenges it brings — before our competitors beat us to it.
No one interested in the affairs of the European Community can deny that the next four or five years are absolutely crucial to the future of this country and its people. That is why it is so important and such a matter for commendation that my right hon. Friend the Chancellor's Budget puts this country's economy in the best possible shape to enter those years and make the most of the advantages before us.
There may be many obstacles and difficulties to overcome. However, we start with some advantages. We have the advantage of a sound economy which is enterprising and efficient in which the world has confidence. Thanks to the fiscal changes introduced by my right hon. Friend the Chancellor, the best business men and managers in those businesses will continue to be motivated in our economy and have the incentives to produce the goods for us all.
I do not believe that we can have anything less than the highest dedication if we are to beat our competitors. The French and the Germans in particular—our two greatest rivals—suffer from disadvantages that we do not have. We have political certainty, but the French do not and the Germans seem to be in some danger of losing their certainty. The years between now and 1992 must be used for the sake of everyone in this country—for those in work and those out of work and for the sake of those working and those in retirement.
They must be used to maximise our advantages and to acquire business if we cannot export into those markets —to buy businesses in France and Germany—and to use the period between now and 1992 to move forward to be ready to meet and beat our competitors. The best


memory of this Budget for historians in future will be that it was the Budget that prepared to take this country into Europe and to make us the leader in Europe.

Mr. Denis Howell: I am grateful for the opportunity to speak for a while in this Budget debate. I want to deal with two aspects in which I feel I have a duty to put forward the fight for my constituents in Birmingham, Small Heath. The first aspect relates to the abject poverty that we face in my constituency, about which this Budget says nothing, and the other relates to the serious and continuing decline of manufacturing industry in the west midlands.
Before I deal with those two points, I want to comment on the Health Service and the questions of morality that have been raised today. It is fascinating that the Secretary of State for Employment, who is not in the Chamber at the moment, spent all his extremely short and very unsatisfactory speech deploring the fact that anyone should raise questions of social justice in relation to the Budget.
I do not think Conservative Members can object to considering the Budget from the point of view of morality. I do not like scenes such as those we saw the other day, but if ever we needed an increase of moral indignation it is now, because of the poverty about which the Budget had nothing to say—the Budget that handed out largesse to the richest people in the country. That was bound to create a sense of moral indignation, and it is the job of the Labour party—and other opposition parties—to foster such a sense if we are to have any hope of tackling these problems.
I want to talk about the Health Service. In Birmingham, many of the worst features of the lack of resources for the Health Service have been manifested in the children's hospital and other hospitals at which, at one stage, doctors were being instructed by administrators not to admit or operate on children with hole-in-the-heart conditions, not for medical reasons but for administrative and financial convenience. If ever there was immorality, that was it.
The right hon. Member for Worthing (Mr. Higgins) told us that he hoped the nurses' pay award would be funded in full, and I share that hope. I know that it will be. The Chief Secretary has already told us that the award is expected in mid-April, when an immediate judgment will be made on it and a decision will be announced by the end of April. The local elections take place in the first week of May. In view of the overwhelming case for the nurses, it is disgraceful that no interim award was made to them in the winter months. The funding of the Health Service should have had a place in the Budget. I know all about the extra £1 billion, but allocations now being suggested for district hospitals for the next financial year do not approach meeting the demand on those hospitals. It is important that Opposition Members should say that in the House.
If I may return to the issue of morality in the Budget, there is a biblical parable that applies to it—that of the Good Samaritan. The Chancellor and the Government have passed by on the other side in the face of the atrocious conditions in which some people, particularly in my constituency, live. The Chancellor gave an interview to Brian Redhead the other day. Mr. Redhead asked him what was in the Budget for the poorest of the land.

Unfortunately, these days television and radio interviewers ask a question and then fail to follow it up because they have clipboards in front of them and they have to get on to the next question. They do not listen to the answer to one question before asking another. However, the Chancellor answered that everyone would gain from tax relief. If everyone got tax relief that would be true, but the poorest of the poor get none. There was nothing in the Budget for them, so the Chancellor's answer in that respect was wholly dishonest.
The Secretary of State for Employment, who opened the debate, represents Sutton Coldfield in Birmingham, but I represent Birmingham, Small Heath — the city centre—which has the highest rate of infant mortality in Europe. That is why it is my duty to make this speech today and to ask the Government what on earth they are doing when, in Nechells, in my constituency, we have an infant mortality rate of 23 per thousand of the population. That is a scandal that those of us who have been in politics for a long time thought we had eradicated years ago. It is a shocking state of affairs. The reason for it is that my constituency has the highest percentage of single-parent families in the area and the average age of mothers in Nechells who lose their children in the first year is lower than anywhere else. Who can come to the help of these unfortunate children and mothers, when there are no tax reductions for them, no proper increase in child benefit, their rents are to be forced up and their one-off social security payments are to be denied them under the new social security legislation? To whom can they turn for help? They must look to their local authority, but next year that local authority—one of the most responsible in the country — faces a £300,000 cut in its partnership programme, which offers the only relief in our part of the city.
To add to all this, the unemployment rate in my constituency is more than 30 per cent., and more than 60 per cent. or 70 per cent. among young people. Those are disgraceful figures. The effect of all this social deprivation was seen on the streets of my constituency a year or so ago in Handsworth and Lozells. One cannot divorce this abject poverty and social deprivation from the good order that we need. Some of us spend much of our time working for racial harmony in our constituencies, but whatever we do, the effects of the policies that bring about this despair in the lives of thousands of ordinary people are being exacerbated by the Budget.
Sometimes it is necessary to explain to the House the living conditions of people in our industrial communities. I am not against reducing taxation whenever we can, and my party needs to be careful not to be always the party that is against lowering taxation But anyone with a moral foundation to his being must ensure that, before he benefits the better off, or Members of Parliament or even the industrial classes, he remembers his overwhelming Christian priority to provide for people living in absolute destitution and despair. Birmingham is doing its best, with all-party agreement in large measure. Just this week the city council is calling for a symposium of architects, decision-makers, landowners and others to help to advise us on how to begin the regeneration that the city needs, and how to use our land properly.
I want now to deal with trade and industry in the west midlands. I agree with the right hon. Members for Worthing and for Old Bexley and Sidcup (Mr. Heath) about the importance of Europe. I declare a prejudice, or


an interest — I am chairman of the Labour committee for Europe. I am pleased to tell the House that we in Birmingham, faced with the decline of our manufacturing industry, understand that we have to accept what will happen in 1992. The trade union movement is now coming overwhelmingly to understand the importance of our full involvement in the European Community. My union—the Association of Professional, Executive, Clerical and Computer Staff—recently passed a resolution proposing that we immediately join the European monetary system. I am glad to say that I proposed the resolution and that it was carried overwhelmingly. I offer that information to the House as one sign of the fact that the trade union movement understands where its future interests lie. I hope that colleagues will note that.
We have lost 30 per cent. of our jobs in the west midlands during the lifetime of the Conservative Government. We have lost 1 million jobs because of the decline in manufacturing industry. The losses continue. The total number of jobs has gone up a bit because we have gained some in service industries, banking and insurance, but the number of jobs in manufacturing is still going down.
I am an old-fashioned Socialist. I believe that all wealth is created by the application of labour to the raw material or the land, but I can see that when banking and insurance attract investment from overseas, they have contributed to the growth of wealth. Nevertheless, Britain's interests must lie with the manufacturing sector and the decline of manufacturing should worry us all.
Productivity in the west midlands is now what it was in 1979. It is quite appalling that we have just got back to where we were when the Conservatives took over. Germany and Japan, however, have moved 25 per cent. ahead of us. I agree that exchange rates are critical, but I do not want to say anything about them except that I am on the side of the Chancellor rather than the Prime Minister.
The worst feature of the Budget is its complete failure—my friends in the Birmingham chamber of commerce, the Engineering Employers Federation, the West Midlands Trades Union Congress and the West Midlands Economic Development Council agree with me — to provide for research and development, training and retraining. The lack of skills in industry is growing upon us because for years Birmingham's industry has not taken on apprentices or trained skilled people. That failure will catch up with us and if we have anything like the improvement in the manufacturing base in Birmingham which the Government see in other sectors of the economy, we shall not be able to deal with it because employers do not have sufficient incentives to provide training, retraining or research and development. Capital allowances have gone and there is nothing for apprenticeships.
There is one other matter which I wish to raise. I am not sure whether my language will be parliamentary, but I am sure that you will be the first to draw my attention to the fact if it is not, Mr. Deputy Speaker. We are dominated by the bottom line. I am getting fed up with it. Whenever we discuss anything, we are always told that we must look to the bottom line as though it should determine all our values and needs. I am forming a new society,

which I am calling Bugger The Bottom Line. I hope that you are tolerant enough to allow me to say that, Mr. Deputy Speaker.

Mr. Deputy Speaker (Mr. Harold Walker): Order. I think that Mr. Speaker would want me to say that he does not regard that as parliamentary language—indeed, that it is vulgar and coarse.

Mr. Howell: I am sorry, but I fully understand your reproach, Mr. Deputy Speaker, which I expected. It underlines the point that I wanted to make.
I am advised by industrial friends that when industry in Birmingham wants to expand, it is dominated by insurance companies and pension funds who want to invest but that, to a great extent, the institutions demand such high returns on their investment that the process is self-defeating, so no manufacturing jobs are created.
The worst feature of the appalling unemployment in Birmingham is its effect on individuals who will never have a job. People get a feeling of pride and self-respect when they pick up a wage packet which they have earned, rather than take a handout. Never having that opportunity has an appalling effect on generations of young people.
I spent a lot of time in industry before coming here, and it seems to me that the absence of the discipline of the work place in the lives of so many people is a serious matter for any community. We all know that it is fellow workers who knock the corners and edges off to produce a round person. They impose a discipline which is often not imposed anywhere else. I would create work for its own sake because everyone ought to have a right to a job, but in any civilised society every person should demand that everybody works so that they make a contribution to the community. We thus enhance individual personality.
My greatest criticism of the Budget is that it does not enhance the personality of the individual when there is such severe unemployment in Birmingham and the rest of the industrial west midlands. As a football referee, I can only say that the score on this Budget is: The Greedy 5, The Needy 0.

Mr. John Redwood: I congratulate my right hon. Friend the Chancellor of the Exchequer on his magnificent display of fiscal pyrotechnics. As always, Opposition Members have tried to dampen them down and ruin the display.
It was intriguing to hear the hon. Member for Dagenham (Mr. Gould) trying to suggest that the tremendous success which my right hon. Friend has pulled off is due entirely to the presence of North sea oil. If we read the Red Book forecast carefully, we see that it is quite clear that oil has been a problem for us this year, and will be next, and not a great opportunity. There has been a dramatic decline in Government revenues from oil to only £3 billion next year and, in the forecast for the balance of payments, an adjustment has been put in which shows that exports will do much better without oil next year than they will with it. That is a perfectly sensible forecast.
The simple fact is that the £3 billion from oil just equals the amount of debt that the Government are repaying, and that the bulk of the revenue to pay for all the public spending quite clearly comes from the success of the economy, rising incomes and rising purchases in shops.

Mr. Robert Sheldon: I did not want to intervene, but it must be said quite clearly that 15 years ago we bought oil, whereas now we sell it. That is the effect on our balance of payments.

Mr. Redwood: The right hon. Gentleman is quite right, but what matters is the change over the years. It will he less helpful next year than in previous years, and it has declined this year. To put the matter in perspective, the contribution to the balance of payments from oil revenues is forecast as £2·5 billion, while the contribution from the service sector—which which has been a great success in our economic strategy in recent years—is forecast as £8·5 billion.
The next strange doctrine of the hon. Member for Dagenham was his assertion that interest rates would prevent investment and encourage consumption. Has he not seen the figures for recent years, which show a surge in both commercial and industrial investment at a time of relatively high interest rates? Does he not understand that, for industrialists and those in commerce, what matters is the gap between real interest rates and the return on capital? Again, one of the great successes of our economic strategy has been the surge in the return on capital, which has made investment more worth while and has brought forward new investment projects. For the past 19 months it has also created new jobs, which is exactly what the strategy was designed to deliver. I should have thought that Opposition Members would welcome that.
If we try to divine what the Opposition want, we can only conclude that, first, they want the rich to pay more tax—although they do not tell us how much; secondly, that they want tax to take a larger proportion of our national income—but again they will not tell us how much. [Interruption.] I must have misunderstood: they want higher taxes for the rich, but the same amount of overall taxation. Thirdly, they want a substantial increase in public spending across the board, on a variety of programmes, but within that they especially want an increase in the proportion spent on health.
Is it not strange, therefore, that those are the three priorities that the Government have adopted since they took office in 1979? The tax paid by the top 5 per cent. has risen by 5 percentage points in the total tax take. Opposition Members say that that is because they have had large pay rises, but everyone else has also had a pay rise. There has been a large increase in the number of people locating in this country and in the risks that they are prepared to take. That proves my right hon. Friend the Chancellor's point that to lower tax rates at the margin for the better off will generate more wealth and more jobs, and that those then percolate through to help everyone in the community. That is a welcome change.
The proportion of income taken in tax since 1979 has, I regret, actually risen. It is a sign that, at the beginning, the Government put public services and fiscal prudence above making a dramatic cut in the tax rates. I welcome the fact that the Government are now in a strong enough position to cut the overall tax burden, not just the high tax rates on income. As the economy grows, I am sure that that process will increase and strengthen, to the consternation of Opposition Members, but to increasing the strength of the economy.

Mr. Nigel. Griffiths: When will the burden of taxation imposed by this Conservative Government be reduced to its levels under the previous Labour Administration?

Mr. Redwood: I hope that, as a proportion of gross national product, that will happen before the end of this Parliament. If not, it will certainly happen before the end of the subsequent Conservative Administration, during which the Government will continue their policy of tax reduction to below a 20 per cent. standard rate. A rate of 20 per cent. is a feasible objective for this Parliament.
The Opposition's desire for an increase in spending on health has also been met. As a proportion of total public spending, health spending will rise from 11·9 per cent. in 1979 to a projected 14·1 per cent. in the early 1990s, and the increase already stands at more than 13 per cent. Spending on health has increased as a proportion of a total which, in itself, is rising, thanks to the increase in real expenditure made possible by the large amount of tax revenue generated by our economic success. I hope that Opposition Members welcome those moves.
On the issue of fiscal balance, I greatly welcome my right hon. Friend the Chancellor's decision to run the economy with a £3 billion surplus in the ensuing year. Opposition Members find problems with that, too. I remember debating with some of them, outside the House, what would be an appropriate level of deficit or surplus for the coming year. I have always said that it would be right to run it at about a nil balance — no borrowing —because that would help the economy to grow strongly. Opposition Members and media figures told me that there would be a recession, which had to be taken into account. Indeed, if there were to be a major international recession this year, a borrowing level of about 1 per cent. of GDP would be appropriate. However, I stressed that that would be extremely unlikely and that, instead, we would witness another year of good growth. I very much welcome the fact that Britain will have another year of satisfactory growth, which will be even better than expected, so that we can make a welcome repayment of debt from the public sector and so reduce the crippling interest burden that this Government inherited from the Labour Administration.
I welcome the joint decision of my right hon. Friends the Chancellor and the Prime Minister to allow interest rates to fall. In the circumstances of the past couple of weeks, they rightly decided that the sterling exchange rate had to move upwards. It makes little sense to spend cheap pounds buying dear deutschmarks simply to nurse a loss on the foreign exchanges. It is quite clear that our currency is very much more attractive than many other currencies because of the robust health of the British economy and the level of real interest rates in the United Kingdom compared with Germany and elsewhere. However, it was also right to allow interest rates to be nudged downwards, and they may have to come down further if the flow of hot money into this country continues and puts further pressure on exchange rates. I do not believe that that will result in a major inflation problem, because the money figures have been greatly distorted in recent months by that very intervention itself. Not all of it has been properly funded because it occurred on such a large scale.
If we move towards a policy of little or no intervention in exchange markets, and if we produce a prudent balance between the levels of exchange rates and interest rates, there can be both a low or nil inflation policy and a further attractive reduction in interest rates for house buyers, industry and other investors. That can be accommodated quite easily, because there remains in our economy a substantial surplus capacity—for example, derelict land, the unemployed and other factors of production—all of


which can be applied as we spread prosperity ever more widely across the country. We can now bid those factors into use without running many, or even any, inflationary risks.
I very much approve of the moves to deal with some of the tax dodges that have been a feature of recent years, partly due to the high tax structure. It is better to have a simple, two-band system, because that will reduce the number of dodges that the rich can take to protect their wealth and their incomes if they want to keep them in this country. The changes on forestry, covenants and company cars go in the right direction, and are entirely at one with the strategy of lower tax rates, but more tax income because of the enterprise effect.
My right hon. Friend the Chancellor is perhaps being unduly cautious in estimating £2 billion as the cost of cuts in the higher tax rates. As people of enterprise, the risk takers, come into this country, the benefits will be so great that the cost of the tax cuts will not amount to anything like £2 billion. I am sure that before the end of this Parliament the rich will be paying yet more as a proportion of the total. I do not understand why Opposition Members are looking so concerned; surely that is exactly what they want. Perhaps it is merely jealousy on their part. They cannot bear to think that more well-off people will come to this country, bringing with them their investments and their incomes to spend on creating jobs in Opposition Members' constituencies. I, for one, would greatly welcome that.
I have only one minor criticism of the Budget, which is that I am a little concerned about mortgage relief for first-time buyers in high-cost housing areas. I understand the need to produce equality of treatment, at least between married and unmarried people, but I am also well aware that in many parts of the south-east house prices are such that it is extremely difficult for people to get started on the home ownership ladder with only a £30,000 mortgage. I hope that there will be second thoughts about that.
It is a splendid Budget. It is a Budget for more jobs, more prosperity, lower tax rates and better public services. I look forward to the conclusions of the health review and the health pay award, because I think that there will be more surprises in store for Opposition Members. I am sure that by the end of the next financial year my right hon. and hon. Friends will have produced a system for health management and improved services of which we can also be proud.

Mr. Brian Sedgemore: I was reading in a satirical magazine over the weekend that the Government have set up groups of WOMBATS — working ministerial breakfast action teams—to justify the Budget in the face of the stinging criticism that it has received.
Being a reasonable person, I begin by complimenting the Chancellor. I believe that it required courage to introduce this Budget and that he needed nerves of steel and extraordinary moral and spiritual resources to do so much for so few in return for so little. The Chancellor has come through his ordeal, pleased and smiling, and worshipped and revered by the gawping, grasping, privileged, avaricious, salivating super-rich. Moaning minnies, puritans, the poor and those whose bootstraps

have let them down did not like the Budget, but they must realise that the Chancellor's world has passed them by and that their pathetic cries, "Stop the globe, I want to get of", will no longer be heard.
For the few, the Budget was much more than a spring tonic. For those of us who like to live vicariously, it was one for fantasies and dreams. For all of us, it has presaged a world in which we can get rid of that wretched quality of empathy—the idea that it is possible for a human being to put himself in the position of another. After this Budget, other people simply do not count.
In the real world of the City — next door to the forgotten wastes of Hackney—they like the Budget, and why not? I ask my hon. Friends to stop cavilling about it. All right, there may be a balance of payments crisis and the forecast deficit of £4 billion may turn out to be £8 billion, but let us look on the bright side.
Yes, when the Prime Minister stood at the Dispatch Box and said that Britain was becoming a filthy, squalid and rundown country with a crumbling infrastructure because of lack of investment, that might have been true, but we should have a sense of proportion. In a super-binge society the comforts of the day are bound to be far more important than the problems of tomorrow. I dare say that my right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell) was right when he said that a few babies may die because of want of treatment in the National Health Service as a result of the Budget.
However, I am bound to ask my hon. Friends to attempt to comprehend the sheer exquisite delight that the Budget has given to a few very important people. For them, I agree that the Budget has been messianic. It will change people's lives. I give my hon. Friends three examples——

Mr. Neil Hamilton: Sir Ralph.

Mr. Sedgemore: Well. I shall come to Sir Ralph in a moment.
At 6 o'clock on 14 March, just after the Chancellor had sat down, having delivered his Budget speech, a helicopter took off from docklands. A few minutes later it landed on an airstrip at Northolt. Two men in flak jackets were transferring £5 million in used notes into a light aircraft, which was destined for one of the great financial centres of the world — Liechtenstein. Just as the light aircraft was about to take off, air traffic control received a cryptic message over the teleprinter from the City godfather who had organised the mission. It stated,
Abort mission. Just heard the Budget. £5 million now to go into property via the Business Expansion Scheme. Rachmanism legalised at last. God bless Nigel. Stuff Liechtenstein.
Meanwhile, over at Cazenove, the stockbrokers to the Queen, they were taking a little bit of time off from their worries about the fraud squad investigation into Guinness as it closed in on them. Of course, as we would expect, their celebration in favour of the Budget was quite dignified. They were drinking bubbly from cut crystal glasses, poured from bottles matured in the finest wine cellars in all Europe. The toast was, of course, "vivat, vivat cancellarius" — may the Chancellor live for ever and ever.
More extraordinary than that, yesterday I went to a celebration party for the Budget at the Dorchester in Mayfair. It was organised by a merchant bank for the hundred richest people in England. Everyone who was


anyone was there. I felt privileged to be a fly on the wall. Of course, I shall tell hon. Members who was there, what they thought of the Budget, and how they will spend the lorryloads of money that the Chancellor has given them.
I shall talk first about the atmosphere, which told one more about the way in which this Budget has been appreciated than anything else. It was straight out of "The Great Gatsby" except that I knew that it was a celebration party for Budget-88 by the beautiful LaCroix dresses that the more fashionable women were wearing. It really was a spectacular scene:
Men and girls came and went like moths among the whisperings, and the champagne and the stars …
At 7 o'clock, the orchestra arrived. This was no thin five-piece affair, but a whole pitful of oboes, trombones, saxophones, violas, cornets, piccolos, and low and high drums.
The bar was in full swing. Floating rounds of cocktails were picked out by the glittering diamonds in the chandeliers. Laughter — at first light, then raucous —spilled with prodigality.
At first, the attention was concentrated on somebody called Sir Ralph. I did not catch his surname, but I understand that he is a man like Mr. Speaker — a bespoke tailor who runs a chain of shops. He was telling the assembled multitude that he earned £1,300,000 per year, and that he stood to gain £750 per day by the Budget. My hon. Friend the Member for Bolsover (Mr. Skinner) keeps telling me that it is £750 per night, but I am blessed if I know what he is talking about. Sir Ralph was telling the assembled multitude that he was going to buy a lavender-coloured Rolls-Royce with the first month's tranche from the Chancellor—£20,000—and that he was going to use his lavender-coloured Rolls-Royce as an omnibus to ferry around those starlets, without which I understand that Burton cannot carry out a business deal these days.
Then the cameras and the attention homed in on a big man. He was gross and ugly. No, I am not talking about the hon. Member for Crawley (Mr. Soames)—they kept referring to him—[Interruption.]—yes, my hon. Friends have got it—as Cap'n Bob. He said that he would make so much money out of the Budget that he would be able to buy out all 49 bookshops owned by Blackwell's which were selling unflattering biographies about him, and that he would still have money over to put in a bid for each and every one of the 22 first division clubs in the Football League, which he would rename the "Maxwell championship". Yes, it is a good Budget, isn't it?
Then there was that super-league butcher, who owns £1 billion—a man called Vestey. He has spent a lifetime writing in books that he has never paid any tax. So naturally he was highly miffed because, not paying any tax, he did not get any benefits from the Budget. He was telling his friends that as an act of revenge he was going to put together a consortium to buy out the Treasury when the Chancellor says that he will privatise it.
The first supper of the evening for the magnificent Budget was a sumptuous affair—with oysters, black and red caviar, smoked salmon, escargots and lobster. At one table was a Stanley from Dixons, who earned £659,000 per year. He was commiserating with Maurice from Saatchis, a much poorer man, who takes home only £500,000 per year. Everyone felt sorry for Maurice.
At the next table were one or two people who had had a hit too much to drink—the rich are apt to do that. One of them was saying to the other, "What kind of idiot

of a Chancellor thinks my pretty little wife can fill in her own tax return? Who is this Lawson fellow anyway? Some kind of damned Socialist, I suppose?" The other replied, "It's not the wife, but the mistresses I worry about. Surely it's time they were made deductible. That's the only tax break I want to give me an incentive."
Then came the final supper at midnight—the most fabulous that I have ever witnessed. It had hardly begun when "He" appeared. As he appeared there was a wave of sentiment, as if a war had been won and a new civilisation was about to dawn. This was not Blake's Agony and Ecstasy, but ecstasy and more and more and more. As the guests waved, cheered, clapped, jumped on the tables and wept for joy, he stood there like an icon — the Chancellor of the Exchequer of the United Kingdom, the right hon. Member for Blaby (Mr. Lawson). He did not make a speech. Upright, magnificent and imperious, a surreptitious leer on his face, his eyes alighted on one of the servants who had just dropped a tray of oysters. Suddenly the guests understood and took their cue from the Chancellor. In no time they were all leaping up and down and in a sweaty frenzy looked at the servant and screamed, "Shame, shame, shame". Then they gave a Churchillian V-sign and shouted "Up yours, up yours."
Some of the guests then passed out, others were sick into their bibs and a few made it home, their thingumajigs unable to rise to the occasion. Who was left but the Chancellor of the Exchequer standing alone. He knew that his Budget had not been in vain and that as an outsider he had arrived. Yet, in his moment of triumph, even he felt uneasy and sick. I knew how he felt because I wanted to vomit when I first heard this Budget. The Chancellor said to himself, "Could anything in this whole world be worth this?" Suddenly he realised a Budget too far had been followed by a party too far and that the decline and fall of Thatcherism had begun.

Mr. Leon Brittan: I do not know whether the contrived salivation of the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) and the imaginary antics of the rich at this fictitious party shed much light on the Budget, its effect and implications, but I cannot help thinking that they do not. However, so long as the hon. Gentleman has enjoyed himself burning the midnight oil to that effect, I dare say some purpose is served.
I warmly welcome the Budget proposals. They have been made possible only by the success of the Government's economic policy generally over the past nine years. Its proposals amount to a fiscal watershed and will undoubtedly contribute to ensuring further economic progress over the coming period. What is particularly important, especially in view of the anxieties and reservations expressed by my right hon. Friend the Member for Shropshire, North (Mr. Biffen), is that the apparent largesse of the Chancellor has not been achieved by borrowing more money. The fiscal stance has been rightly tight. To have a negative PSBR of £3 billion this year, and to repeat a substantive negative PSBR for next year, is, by any standards, the clearest sign of the Government's commitment to the battle against inflation, which the market would ignore at its peril. Those who do not take the message are likely to get their fingers badly burnt.
I was sorry to learn from the press, if it be true, that the Chancellor considers that the process of reforming personal taxation is now at an end. I am afraid that I cannot agree with him. The principles underlying the Budget have a long way to go before they are fully implemented. The central principle is the abandonment of penal taxation at the upper level in return for the abandonment of myriad perks and tax concessions. The history of the past few years on both sides of the Atlantic shows that if one does that the Treasury will not be any the poorer and the economy will be much richer. The Budget goes a long way to give effect to these principles, but there is still a long way further to go.
Whatever one's view of the economic effect of mortgage interest tax relief, it is embedded in the personal financial arrangements of millions of people and it would be impossible to remove it. What would be possible would be to limit mortgage relief to the basic rate of income tax. That would be entirely in accordance with the general philosophy that I have just described. Those who pay the new higher rate of 40 per cent. do not now need any further incentives to encourage any house purchase of the sort reflected in the continuation of mortgage interest relief at the higher rate. The same applies to tax relief at the higher rate on pension contributions.
There is also clearly unfinished business on national insurance contributions. I can understand why my right hon. Friend did not simply remove the upper earnings limit this year. That would have placed an extra burden on 2 million middle-income taxpayers, but it remains an extraordinary quirk of our tax system that if income tax and national insurance contributions are taken together the percentage paid at a certain point falls when the upper earnings limit is reached, and rises again when the higher rate of income tax becomes payable. The Government will have to return to that, particularly if they contemplate, as I hope they will, moving to a system of financing the NHS from national insurance contributions. If they do that, it will almost certainly be desirable to extend the base of national insurance contributions.
That leads me on to the one statement in the Budget speech about which I have considerable reservations, and that is the express aspiration to reduce the basic rate further to 20 per cent. It is only an aspiration, and not a commitment, but I hope that its fulfilment will be deferred indefinitely. At 25 per cent. no one could possibly say that the basic rate is unacceptably high. Indeed, it has been a triumph of the Government and taken nine years to get to that figure. If any further money is available for the reduction of taxes, the top priority should surely now be to help people at the lowest end of the income scale, preferably by taking them out of the tax net altogether, and at last by reducing the tax burden on them.
The Budget has gone some way towards doing that. Allowances have been increased by twice the rate of inflation, and that has had the effect of taking 750,000 people out of tax altogether, but substantially further progress in that direction is immensely desirable for two reasons. First, taxation is obviously a real burden on the lower end to a greater extent than on the upper end. Secondly, by removing the tax burden, it increases the attractions of working rather then staying on the dole. Indeed, for some people it makes it worth working when previously it was not. Therefore, it makes it possible to

take more people on at pay rates which employers can afford. That would be the biggest single contribution that the Government could make towards reducing unemployment. That is why the Government should not set a fresh target for reducing the basic rate further, but should set a target of the number of people to be taken out of paying income tax altogether who at present pay it.
I know that the target has a tendency to move as people earn more and come into the tax bracket again. None the less, a clear target concentrates the mind wonderfully. If it had not been espoused in 1979, that 25 per cent. target would not have been reached today. Therefore, the time has come to set an imaginative but realistic target for taking people at the lower end out of tax altogether and thereby making the biggest contribution that the Government could make towards solving the problem of unemployment. Let it be our aim that, by end of this Parliament, 3 million fewer people will pay tax. That target is attainable. Of course, to achieve it means forgoing a great deal of revenue. It is expensive to increase allowances and thresholds, as the Red Book so clearly shows, but we should clearly establish that priority, and the sooner we do so the better.
If we are to make international comparisons to justify the cut in higher rates, we must be prepared to look at comparisons at the other end, too. As Irwin Stelzer clearly pointed out in yesterday's edition of the Sunday Times, a married couple paying tax at 25 per cent. when their income is just over £4,000 represents the highest rate applied at that level of income by almost any country today. In addition to using any money available in future to cut taxes to take people out of paying tax altogether, serious consideration should be given to having a reduced rate band of, say, 15 per cent., as in the United States, for those earning just about the level of the allowance.
Incentives are just as important for poor people as they are for rich people, and the introduction of a reduced rate band would have a powerful incentive effect. The cost of introducing such a rate would be much reduced if, as happened in the United States, it applies only to the first tranche of income, in the case of low earners, and tapers out as one goes up the income scale. Whether we take people out of tax or reduce the rate at the lower end, or both, the objective is the same. It is to make the maximum contribution that the Government can to reduce unemployment. Unemployment is the greatest remaining economic and social ill in many parts of the country, and it should be our top priority to take fiscal and other action further to reduce it. That proposition cannot seriously be denied. In the Budget, some progress has been made towards achieving it.
Apart from general ideological objections to reducing top rates, the main criticism that my right hon. Friend the Chancellor has faced—I have been referring to future aspirations and not to the Budget—is that the Budget should have been used to put more money into the National Health Service. On that point, I agree totally with my right hon. Friend the Member for Worthing (Mr. Higgins). Those who make that criticism must look at public expenditure and taxation decisions as a whole. Such decisions are taken at different times, but they come into effect for the same year, that is, 1988–89. It is perfectly natural for public expenditure decisions to be taken earlier. Those who must plan their expenditure through the year need to know what the figure is to be well in advance, while taxation can be reduced or increased much


more quickly. Therefore, it is entirely fair to point out that, in the same year as taxes are coming down, spending on the National Health Service is going up by £1,100 million.
What is more, that is not the end of the story. We know perfectly well that it is highly likely that the review body will shortly recommend a substantial increase in nurses' pay. No Government can unequivocably tic themselves down in advance to saying how that will be handled, when they do not know precisely what will be involved. I am totally convinced that the Government will fully implement whatever is recommended. If the cost of doing so exceeds what they are currently allowing in the National Health Service provision for the Department of Health and Social Security, that extra sum will be met out of the substantial public expenditure reserve. The Government will be absolutely right to handle the issue in that way, and I am sure that they will do so. If that happens, the net effect for 1988–89 will be a major total increase in National Health Service provision — the £1,100 million and whatever extra is needed to meet the review body's recommendations That will be totally justified, but, until the current review of the pattern of health care is concluded — I hope that it comes to some radical conclusions—it would be quite wrong to go any further with the injection of extra sums of public money.
The Chancellor's speech and the Red Book are lapidary and opaque. Instead, the Chancellor tells us to look at actions rather than words. Last week we saw a cut in interest rates. It is not quite satisfactory to leave it at that. There are decided advantages in exchange rate stability and in not having too high a rate for the pound against the deutschmark. But stability does not mean that the rate never changes. It certainly does within the EMS exchange rate mechanism. Indeed, many people think that a realignment is likely soon.
There may be occasions on which upward pressures on a currency are too great to he resisted by any feasible amount of intervention, and on which inflationary pressures are too great for it to be desirable to reduce interest rates. In some circumstances, an upward movement in the exchange rate may be fully justified. It makes perfect sense to have a policy of stable exchange rates with, at least, an implied right to revise them if circumstances materially alter. Anything further than that would be an unrealistic straitjacket, which never existed in the past, and would not be required by membership of the exchange rate mechanism of the EMS. If that is the policy, it would be highly desirable for it to be clearly stated.
Monetary aggregates are not robust enough to provide a credible monetary policy. Our only lodestar is the exchange rate, and interest rates are the major instrument. Whether we are inside or outside the EMS, there is no reason why the current broad target for the pound should not be publicly stated. If, for anti-inflationary reasons, it must be set a shade higher than some in industry would like, so be it. With an explicit exchange rate target range we will give industry and markets the inestimable advantage of that degree of certainty and credibility in monetary policy which, over the years, has proved to be beneficial in fiscal policy. I hope that that, too, can soon be achieved.

Mr. Peter Shore: The speech of the right hon. and learned Member for Richmond, Yorks (Mr. Brittan) was like the parson's egg;

it was good in parts. Among the parts that I welcomed were his statements to the effect that the emphasis should fall on lower-rate taxpayers or people on low incomes and, particularly, his comment about the value of introducing a reduced band. I disagree with his general judgment that the essential principle of the Budget is the abandonment of penal taxation. It is far more just to describe it as the abandonment of progressive taxation. The Prime Minister and the Chancellor believe that they have achieved that.
The right hon. Member for Old Bexley and Sidcup (Mr. Heath) made an important point. He pointed out to the Chancellor and the Secretary of State for Employment that, in spite of the rather startling reduction in this year's Budget, taxation accounts for a much higher percentage of gross domestic product in 1988 that it did in 1970. It is about 37·5 per cent. now, compared with 32 per cent. in 1970. How do we explain the difference? Why do the Government need to levy so much more taxation in 1988 than they did in 1970? The answer lies in the sphere of responsibility of the Secretary of State for Employment. The real difference—the reason for the great increase in the burden of taxation between 1970, when we had unemployment of some 600,000 and 1988, when we have unemployment of some 2·6 million—is the cost to the country of the enormous sums both in direct payments in benefits through the social security system and, even more, indirectly in the forgone income in the form of income tax contributed, national insurance raised, and the rest.
That brings me to the first point that I want to make to the Secretary of State for Employment. He rightly pointed out that during the past year there has been a welcome fall in the rate of unemployment, but he will know that the fall has taken place only during the past year. That is to say, it happened during a year in which gross domestic product has grown by about 4·5 per cent. In earlier years—the right hon. Gentleman emphasised this point—when GDP grew at the rate of 2·75 or 3 per cent., there was no fall in the overall rate of unemployment.
What worries me, and must worry other hon. Members when we look at the growth rate predicted for this year, is that after the first few months we shall not see a continued fall in the rate of unemployment. It will bottom out and we shall be left with about 2·3 million or 2·4 million unemployed. That is on the assumption that the rate of growth does not exceed 3 per cent. Our increase in productive potential is precisely 3 per cent., so if we do not do better in terms of growth achievement we shall not get the fall in the level of unemployment that all serious and sensible people want.
Two themes have dominated the Budget debate, and they are the two criteria against which the Budget should be judged. They are how it affects the distribution of wealth and its relevance to the problems of the real economy. There is no room for doubt about the central objective of this Budget. It is to make Britain a more unequal society. It is a Budget not for one nation but for three—the rich, who are to be enriched beyond their wildest expectations, the poor, who have been excluded, and those in the middle-class, middle-income group, who are to be modestly rewarded.
This is a historic Budget. On no occasion since the 1930s has a Chancellor of the Exchequer openly and consciously sought to make Britain a more unequal society. Over the past 50 years, Britain has seen a gradual movement towards greater equality of post-tax income


and in that movement fiscal policy has played a major part. During the past eight years, that process has been slowed down and virtually halted. Now it is to be sharply reversed. On what basis did the Chancellor decide on this radical shift of policy? It was on the old, unproven assertion — as my hon. Friend the Member for Dagenham (Mr. Gould) made plain in his excellent speech — that the creation of wealth is directly linked to the extent of inequality. The Chancellor believes that the greater the inequality of rewards, the faster will be the growth of national wealth. He believes that man is economic man in the old classical economic sense and can be galvanised into extra effort only by the prospect of greater rewards.
Most of the evidence that we have does not sustain that contention. Japan, the most successful post-war economy, has a top rate of tax of over 70 per cent. and Germany and France, which have done much better than we have, have respective top tax rates of 56 and 58 per cent. Consider Britain's growth rate. In the 20 years or so before Lloyd George's Budget of 1910, progressive taxation barely existed, but Britain's industry and economy declined year by year. By far the fastest rate of growth that we have enjoyed over any substantial period of years occurred in the 30-year period from 1945 to 1974, when progressive taxation was at its highest rate. The case for inequality is, on the evidence, quite unconvincing.
No doubt, that accounts for the subsidiary argument which, I am sure, has surprised other hon. Members as much as it has surprised me. It is the Prime Minister's claim that Britain's top talent no longer flows abroad. I should like to see the evidence for that. Only last year, we were warned that the brain drain among Britain's top scientists and academics was steadily increasing, and that this was primarily due not to the poor level of reward in the United Kingdom but to the lack of opportunity to pursue research and development in Britain's underfunded universities.
Then we have the astounding claim that the lower the rate of taxation on the rich, the greater the yield of that tax will be. According to this myth—we have heard it repeated in the House today — the top 5 per cent. of taxpayers paid 24 per cent. of total income tax in 1978–79. Following the reduction of the top rate to 60 per cent. that category paid some 29 per cent. of total income tax in the year 1987–88. That assertion simply ignores the fact that in the past eight years there has been an explosion in pretax top incomes. The rich are paying more tax not because they have abandoned tax relief and avoidance devices, but because the incomes on which they are taxed are so much bigger. The growth in top salaries will no doubt continue, but the Budget's arithmetic allows for a loss of tax revenue in 1989–90 of £2,000 million as a result of the Chancellor's abolition of the higher tax rate.
The Chancellor and the Government do not seem to understand the importance of income redistribution. The latest available figures — I am afraid that they are for 1985 and I have taken them from the latest issue of Social Trends—show that the bottom 20 per cent. of households in Britain had only 0·3 per cent. of total pre-tax income, compared with the no less than 49·2 per cent. of total national income that went to the top 20 per cent. As a result of tax redistribution, the share of the bottom 20 per cent. grew from 0·3 to 6·5 per cent., while the share of the

top 20 per cent. fell from 49·2 per cent. to 40·2 per cent. Without tax redistribution of income, at least 20 per cent. of Britain's households will be living far below the poverty line. In his Budget, the Chancellor is saying that redistribution from the most prosperous to the least prosperous has to be brought to an end. If the poorest are to maintain, let alone increase, their standard of living, it is not the rich but the middle-income earners who must bear the brunt of the tax burden.
Against the background of the 1988 Budget, we can see more clearly why the poll tax—the community charge—excites such enthusiasm from Government spokesmen. Basically, it is their ideal tax, because it has no redistributive function whatsoever.
The Budget is not designed to meet needs, whether they are personal or community needs. Nor is it designed to assist the real economy. An end to the fall in unemployment and the slow-down in the rate of economic growth will be very evident before the end of this financial year. Moreover, it is difficult to see what additional stimulus the Chancellor will then be able to give to the British economy. As the Chancellor admits, imports will grow much faster than exports this year and a balance of payments deficit of some £4,000 million is anticipated. This is all part of the continuing and destructive trend in our balance of visible trade which will steadily diminish prospects for growth in the economy.
Looking back over the past four years, it is depressingly clear that the only engine of growth in the British economy has been the upsurge in consumer expenditure. Between 1984 and 1987, it has increased in constant prices by £23 billion. For the same period, the savings ratio has fallen dramatically from more than 10 per cent. to 5 per cent. and consumer credit has grown from £11·5 billion to £21·9 billion. Consumer expenditure will continue to grow this year, as will indebtedness and our import bill.
The argument between the Chancellor and the Prime Minister which enlivened our pre-Budget discussions is about the priority to be given to growth and counter-inflation. The Chancellor knows that our balance of trade needs an exchange rate that will enable Britain's exporters to compete successfully against their continental competitors. The Prime Minister, who puts the conquest of inflation before all other considerations, is ready to accept the diminished growth and higher unemployment that would result from a further appreciation of the exchange rate. But both are wrong. We need a continuation of national growth, but both deny the role of public expenditure in achieving it. The Chancellor can increase growth only by making the balance of payments worse. The Prime Minister can conquer inflation only by increasing unemployment and decreasing growth. Both are too doctrinaire even to consider the imposition of restraints on credit creation and consumer expenditure.
The Chancellor has claimed that this is a balanced Budget — the first since 1970. That is true. But a balanced Budget is beneficial only when we have a balanced economy, and that goal will recede even further as a result of the Budget. We have a growing imbalance between public and private expenditure, a growing imbalance between north and south and growing inequality between rich and poor.
The greatest mistake that the Chancellor and the Government have made is to misread majority opinion. There remains a strong sense of social justice. British people are committed ideologically neither to egalitarian


policies nor to inequality, but they have a strong sense of fair play, and that sense has been outraged by the Budget, as was reflected in the two national polls that were published yesterday.
In her Buxton speech, the Prime Minister said that the Budget would be the epitaph of Socialism. She is wrong. It will be the epitaph of this Chancellor and this Government.

Sir Peter Hordern: The right hon. Member for Bethnal Green and Stepney (Mr. Shore) and other Labour Members have called this a socially divisive Budget, but they have misinterpreted the thrust of the Budget. If the effect of lower taxation is to increase the gross national product and the volume of public expenditure, their objections cannot be valid.
We should reflect upon the fact that when the Labour Government were in power and there was high personal taxation, public expenditure was cut—not least on the National Health Service. The right hon. and learned Member for Monklands, East (Mr. Smith) will remember that capital expenditure on hospital building was cut by about 30 per cent. But I go along with the right hon. Member for Bethnal Green and Stepney in this respect: the test will be whether growth will be stimulated by the tax cuts and whether, as a result, an increase in public expenditure will allow further expenditure on the NHS.
The House will be familiar with the public expenditure programme and the fact that in each of the next three years more than £1 billion will be spent on the Health Service. But I draw hon. Members' attention to something else in the public expenditure White Paper that is not immediatelly obvious: the size of the contingency allowance. This year, it will be £3·5 billion, next year it will be £7 billion and the year after it will be £10·5 billion. Of course, all the Departments will be competing for that contingency allowance, but there will be considerable scope for increased public spending on programmes which commend themselves to hon. Members on both sides of the House.
I congratulate my right hon. Friend the Chancellor of the Exchequer, first, on his plan to have balanced Budgets in the future. For a long time, the idea has prevailed that demand management matters most, that the Chancellor of the day should set his course for the coming year according to the way in which the economy should grow, and that the public sector borrowing requirement should be made the handmaiden of Budget judgment. I have always thought that that was wrong. I have always thought that it would be right to have a balanced Budget and for there to be no public sector borrowing requirement. It is most significant that my right hon. Friend has achieved that and intends to continue it in the coming years.
Not only will there be certainty in such matters—or as much certainty as can be achieved—but the fact that there will be almost no borrowing will create a definition and a sharpness in the operations of the gilt-edged market which would otherwise not have existed. In the long term, provided that there are no shenanigans in supporting the exchange rate at the wrong price — that is a big condition—the certainty that will result will mean that the private sector can enjoy lower interest rates.
A great deal of fuss has been made about the reductions in personal tax rates, but we should consider the increased revenue that has been raised during the past two or three

years, especially from corporation tax. The Red Book shows that the revenue from corporation tax has increased by £4,200 million. I remind the House that that follows a reduction in corporation tax from 52 per cent. to 35 per cent., although we must not forget the removal of allowances. That is the right course. In exchange for a reduction in personal taxation, those loopholes should be closed, and my right hon. Friend the Chancellor should make more efforts in that direction in subsequent Budgets.
My right hon. and learned Friend the Member for Richmond, Yorks (Mr. Brittan) said that the standard rate of 25 per cent. was all right and that the Government should concentrate on increasing personal allowances. The Chancellor has increased personal allowances—indeed, he has doubled them. I have some sympathy with my right hon. and learned Friend's suggestion that there should be an intermediate rate between the two, but if it is valid to reduce the top rate of tax to 40 per cent. as a tax incentive, it is just as valid to do it for lower wage earners. I am glad to hear that my right hon. and learned Friend wants to work towards a target of 20 per cent. Even that is too high, certainly when compared with the American rate. The days of tax-cutting have not yet ended, and I look forward to more progress at the lower end of the scale, where incentives are just as relevant as they are at the top.
The Budget is not just about creating wealth. It is about curbing inflation, and in that connection we must consider the exchange rate controversy and the importance of interest rates and exchange rates in the economy. The evidence about the economy is confusing—at least to me. It looks as though lending to the private sector is at record levels, although recently there has been a small decline. Bank lending to the private sector was as much in the first three quarters of last year as it was in the whole of the previous year. I have also noticed that the savings ratio has come down to below 6 per cent. Historically, that figure is very low indeed. It suggests not only that consumer spending is buoyant, but that earnings are expected to increase to allow for that consumer expenditure to continue. I do not think that the reduction in tax rates will do anything to discourage such personal consumption in the future. Interest and exchange rates are very important points for us to consider.
As my right hon. and learned Friend the Member for Richmond, Yorks said, the exchange rate provides the Government's objective, and the interest rate is the only weapon available to the Chancellor. It is important to distinguish if possible between the thoughts of my right hon. Friend the Prime Minister and those of my right hon. Friend the Chancellor. Both of them cannot be right, although it would be very convenient for someone such as me to be able to argue that they were.
Obviously, there are occasions when the pressure on the exchange rate is too much for it, and it is unwise to try to keep it fixed, especially at a level at which it cannot be sustained. It is impossible to conduct a proper monetary policy otherwise. The difficulty about the present dispute is that it has prevented my right hon. Friend the Chancellor from providing the advantages that seem to result from keeping sterling in line with the deutschmark. Of course, it is necessary to choose the right level at which to pitch sterling to the deutschmark, but I feel that this is about the right level. I am sorry that such a controversy has taken place, because there is much to be said for keeping sterling aligned with the deutschmark, as for all


practical purposes we have abandoned monetary policies by the old monetary targets—much to my regret, I may add.
It is by no means easy to adopt a monetary policy nowadays by monetary targets, because of the inflow of foreign funds and the easy extension of credit. West Germany is an example that I should have thought we could follow. Subject to that, I see nothing wrong in subcontracting our monetary policy to West Germany—which, in effect, is what we do if we align sterling to the deutschmark.
People think that that may be rather a soft option, and that we can go on printing money and allow the consumption boom to continue. I do not agree. If we align our currency closely with the deutschmark, as my right hon. Friend the Chancellor would like to do, we must recognise that, in West Germany, earnings are rising by 3 per cent., there is virtually no price inflation, and the public sector borrowing requirement scarcely exists—as, indeed, is the case in this country. It would be wise to spell out that message, and I am sorry that my right hon. Friend may have been inhibited from doing so.
If there is one thing that is annoying at the moment, it is that business and industry do not know where they are; they do not know the Government's policy. If they knew for certain that the Chancellor's and the Government's policy was to keep sterling aligned with the deutschmark, they could plan their production and their future much more easily.
I was very put out last Thursday when I learned that my right hon. Friend the Member for Shropshire, North (Mr. Biffen) had said that he would vote against the Budget. Reading his speech, I discovered that the reason was that he felt that too much consumption was going on, and that therefore inflation might be stoked up. My right hon. Friend, my right hon. Friend the Secretary of State for the Environment, Lord Bruce-Gardyne and I were the principal opponents of the economic policy of my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath). I do not like being outflanked.
I must look very closely at these matters. I am uncertain of the answer. I shall merely observe to my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour), who drew our attention to certain similarities between the present circumstances and what happened in the 1970s, that the difference is that there was then a very large public sector borrowing requirement. In 1974, it had risen to £6·4 billion out of a gross domestic product of £73 billion, about 8 per cent. compared with the present rate of nil. Furthermore, there was a cheap money policy. The minimum lending rate was 5 per cent. in 1971, 6 per cent. in 1972 and 7·5 per cent. in 1973. No one will find that our minimum lending rate has ever gone below 8·5 per cent. since the present Government came to power, and it has even been as high as 14·5 per cent.
On this occasion, I shall not go into the Lobby with my right hon. Friend the Member for Shropshire, North, but I shall certainly watch the indicators as closely as he does.
My right hon. Friend the Member for Woking (Mr. Onslow) talked about the importance of working towards 1992 and the single European market. That is another reason to stress the importance of aligning sterling with the deutschmark. Let us compare our country's economic performance with that of West Germany. Enormous

possibilities are open to us, if we can seize them. I mean by that the opportunities demonstrated in an article that appeared in the Dresdener Bank Review, which mentioned that in mid-1987 — taking 100 as the index — hourly labour costs are 100 in West Germany, and 54 in the United Kingdom. In the United Kingdom, the value added per working hour was only 54, the lowest in any of the countries in the European Community.
West Germany is now going through a rather stagnant period, while we are experiencing rapid economic growth. If we can possibly improve our productivity, labour relations and value added, there is significant scope for further advance. That is why I think it important that we should align our exchange rate to the deutschmark, and I am sorry that my right hon. Friend may feel inhibited from pointing out the prospects that are available.
Whether those prospects may be seized is another matter. If we have many more cases like that of Dundee, foreign investment may well be discouraged. But if we can have more instances of what encouraged Nissan to invest in this country—single union agreements—and if we can do away with the restrictive practices that have bedevilled business and industry for so many years, there may be a prospect of bright times ahead.

Mr. Dafydd Wigley: Earlier in the debate the leader of the Liberal party, the right hon. Member for Tweeddale, Ettrick and Lauderdale (Mr. Steel), spoke of the Budget reflecting a warped society. That is very much my feeling as well. It was interesting to read in The Times this morning of a leading industrialist referring to the cut in the top rate of income tax from 60 to 40 per cent. as obscene. That is a comment that comes to mind now.
That is not to say that the Budget does not contain a number of detailed changes that most hon. Members welcome. We certainly welcome the change in the marriage allowance—as far as it goes—the leaded petrol change, the change in company car perks, the forestry changes, and, indeed, the increase in tax thresholds over and above what is necessary to deal with inflation. Those changes, however, although important in themselves, are relatively trivial in comparison with the strategic error which I believe has been made in the Budget and the social insensitivity that it reflects.
The Secretary of State for Employment tonight made what must have been one of his shortest speeches at the Dispatch Box, even allowing for interventions. I well understand that, given that the references to employment in the Budget were so sparse. Indeed, I could point to only two such references in the whole of the Chancellor's speech. It is from that viewpoint that I want to make my contribution to the debate, because, more than any other, that is the viewpoint from Wales.
We suffer continuing high unemployment. The official figure is now 140,000 compared to about 90,000 when the Government took office in 1979. That is in spite of changed definitions and the effect of part-time work and all the other things. Pwllheli, which has one of the two employment exchange areas in my constituency, has an unemployment rate of 24 per cent. That is what we have to live with, and we looked to the Budget for a solution to the problem, but we sought in vain.
The Chancellor said that the reduction in unemployment as a result of the Budget would be at a reduced rate


compared with what had been happening to unemployment figures in the past year. That hardly gives us confidence, faced as we are with such a level of unemployment. In spite of the pleasant perspective from which the Budget is viewed in Tory constituencies in south-east England, it is looked at quite differently in areas such as Gwynedd and in the old industrial valleys of south Wales.
That brings me to the heart of the Budget strategy. The Chancellor mentioned unemployment only twice, and clearly the Budget has nothing to do with jobs. It seems to be geared to the top 5 per cent. of earners. It is revealing to look at what the Chancellor said about the public sector borrowing requirement when introducing his 1987 Budget:
We have now reached what I judge to be its appropriate destination—a PSBR of 1 per cent. of GDP. My aim will be to keep it there over the years ahead. This will maintain a degree of fiscal prudence that, until this year, had been achieved on only two occasions since 1950.
Accordingly, I have decided to provide for a PSBR in 1987–88 of £4 billion."—[Official Report, 17 March 1987; Vol. 112, c. 818.]
If that strategy to have a £4 billion PSBR was right 12 months ago, by what token is it now not appropriate? If it was a valid, stable and sustainable position 12 months ago, why has it now been abandoned? Why have the Government carried out a considerable U-turn on this matter? The Chancellor is deliberately going down a path which he describes as one of prudence and caution, and is going for a Budget surplus of £3 billion compared with a £4 billion PSBR last year. That is a difference in strategy of £7 billion.
The Budget surplus gave the Government a choice between attacking unemployment and lining the pockets of rich people. If the Chancellor had stuck to last year's strategy of a deficit Budget of about £4 billion, instead of aiming at a surplus of £3 billion, he could have triggered a public investment capital programme of about £7 billion. That would have been worth at least about £350 million to Wales in the form of hospitals, schools, roads and housing investment. It would have created at least 10,000 to 15,000 new jobs in each of the counties of Wales and brought an end to our jobless nightmare. Instead, he has given the money away in tax relief to his richer cronies at the expense of deprived people, not only in Wales, but in other places where the standard of living is low and unemployment is high.
That sort of investment programme could have been achieved within the parameters of the 1987 Budget review and economic assessment. If it is too risky in 1988 to go down that sort of road, he could have forgone some of the tax relief given to those on top incomes. If the money had been used for capital investment, that would have avoided sucking in imports in the way that that is likely to happen because of the tax cuts. It could have been the basis of a direct investment regional policy, but a regional policy appears to have been abandoned by the Government.
If the cost of capital had been brought down by interest rate cuts of a more substantial and significant nature than we have seen, that would have triggered industrial investment and induced ventures which at the moment are regarded as marginal to go ahead. If lower interest rates were to lead to a lower rate for the pound, that would be of benefit to exporters and would lead to increased demands from manufacturers. What I have suggested

would create a coherent whole and could have been an alternative strategy for the Chancellor. All logic points to interest rates that are lower than those that currently exist.
From the point of view of my area, a third element in the Budget is open to criticism. It is the priority given to indirect taxation policy. The increase in petrol prices will be a further blow to rural areas in Wales, Scotland and England. The increase in petrol duty contrasts with the policy of retaining the current level of duty on spirits. The balance struck by the Chancellor is not acceptable.
Another major problem in Wales, which also exists in some other older industrial areas, is substandard housing. The Budget does nothing to help there. Indeed, it takes away the possibility of some tax relief for modernisation. It still allows tax relief to those on the top rate, because at the top rate of income tax a mortgage of £30,000 can qualify for relief. This year of all years, and bearing in mind the giveaway to those on top rates, there is surely a case for restricting mortgage tax relief to those on standard rate, because the resources thereby made available could be used for other purposes, such as spending on those who have greater housing needs.
I have spoken about my constituency problems and about unemployment in Wales, but we also have a major Health Service crisis. In Gwynedd, five cottage hospitals are lined up for closure because the Government have not made available to the health authority adequate resources to keep them open. Towns such as Portmadoc, in my constituency, will not have a hospital at all as a result of the Government's policies. The money being given away by the reduction of the top rate of income tax from 60 to 40 per cent.—about £2,000 million when indexed—is almost exactly what the NHS needs but is not getting. It is immoral of the Government to give away such amounts of money to top earners when people who need vital services cannot get them.
Those who benefit from the reduction in their income tax should remember that the cut has been delivered at the expense of their neighbour's hospital bed. The price of their handout may be that a friend fails to get kidney dialysis. It may mean that when the son or daughter of one of these high earners has an accident no ambulance will be available. There is no such thing as a free handout, and the handouts in the Chancellor's Budget will be paid for by a reduced Health Service and, sadly, human lives. That epitaph on the period of office of the Chancellor is at one with the Thatcherite priority of private greed over public need.
We have to wait to see what will happen to the Health Service, whether additional resources will be made available next month and the month after. It is tonally unfair for the Health Service, which has to run a coherent budget, to have to wait until the new financial year opens before it knows where it stands. Budget day was loudly advertised as NHS day, and rightly so. The issue of the Health Service was rightly the centre of focus. The National Health Service does not need one day of attention, but ought to be given priority all year.
If this battle is to go on, as it should, in what way can the Government have the message brought home to them that their policy is not acceptable? The running down and closure of hospitals was not part of their election manifesto, nor was the reduction of the top rate of income tax to 40 per cent. The Government have no mandate for such priorities, and it is up to the Opposition parties to make life so intolerable for the Government that they


cannot and will not go ahead with such policies. That is a challenge to all Opposition parties. On this issue our message to the Leader of the Opposition is, "For goodness sake, do not go gentle".
This is a Budget for the south-east of England, or at least for some parts of the south-east, because there are pockets there which suffer from deprivation. The Budget does little for those facing unemployment or for those whose homes are not in good repair, but for those who have no unemployment problems, who have good quality housing and can afford private health care, and whose income levels are twice those in Wales, it is a good Budget. Few people in rural Wales or the industrial valleys of Wales receive £0·25 million a year and will be £800 a week better off at a time when we cannot afford to increase and index child benefit.
This Budget takes a massive double backward step towards a second Victorian era. A rich elite is growing fatter, while poor people are getting poorer. The richer regions will prosper, while the depressed regions will decay and disintegrate. This is the most class-based Budget of a generation and must surely trigger a political reaction among all decent-minded people.

Mr. Keith Raffan: In the few remaining minutes, I cannot follow the hon. Member for Caernarfon (Mr. Wigley) by putting the Budget in a Welsh context. No doubt we shall have an opportunity to do that shortly in the Welsh Grand Committee.
The measure of the Chancellor's success, of his ingenuity and of the radical nature of his tax reform is the near unanimity of Members on the Government side in applauding his Budget. Any reservations must be of a minor nature. The key to a strong economy must be to increase incentive and to encourage enterprise. A low-tax economy is a high-incentive economy.
I welcome my right hon. Friend's decision to introduce independent taxation of husband and wife, to give married women a fair tax deal. Raising the tax thresholds by double the rate of inflation and reducing the basic rate will help the lower paid and will be of particular value to the self-employed. The abolition of all the higher tax rates above 40 per cent. will also improve incentives, just as a reduction from 83 per cent. to 60 per cent. did. Lower tax rates can yield greater tax revenues, not less.
Ten years ago, Labour's top rate of tax on investment income was a punitive 98 per cent. Its top rate on earned income was 83 per cent. Since the top rate for both was reduced to 60 per cent., the yield from higher tax rates has more than doubled in real terms. It is equally true that surtax and higher tax revenues fell steadily throughout the 40 years when the top rates exceeded 90 per cent. Tax cuts can raise revenues. When rates are higher, as everybody knows, people avoid taxes or choose to be rewarded by perks rather than by cash. At worst, they move abroad.
As Hamish McRae said in The Guardian,
No one likes paying tax but there comes a level at which it really is not worth the bother of avoiding it.
That is the level which we have now reached. When rates come down, people start paying the tax. Even The Guardian accepts that a persuasive case can be made
for tax revenues having increased as a result of tax rates having been cut.

It is those increased tax revenues which have allowed us to go ahead with the biggest ever increase in National Health Service spending in 1988–89—£1·1 billion in the United Kingdom as a whole and £78 million in Wales.
In a debate on the NHS, the hon. Member for Livingston (Mr. Cook) said:
This year the Chancellor of the Exchequer has the money to ensure that we get a National Health Service that can deliver to its patients."—[Official Report, 19 July 1987; Vol. 125, c. 833.]
When could he have said that about a Labour Chancellor? Labour Members were never in a position to say to their last Chancellor of the Exchequer, "We want you to spend more on the Health Service," because he was too busy paying off the Labour Government's loan from the International Monetary Fund.
Yes, the Government face pressures on the NHS, but they are the pressures of an expanding service which is building new hospitals and undertaking operations unheard of 20 years ago. Those pressures are very different from those that we inherited from Labour — pressures arising from slashing the capital programme by 30 per cent. and from allowing nurses' pay to fall in real terms by 21 per cent.
Under Labour, spending on the NHS fell from 5 per cent. to 4·7 per cent. of GDP. If it had remained at that percentage, we would now be spending £2·9 billion less on the NHS in England and Wales.
Luckily, the Government changed, and spending on the NHS increased from 4·7 to 5·4 per cent. of GDP. Labour want more to be spent on the NHS, more than the increases already provided and more than those promised for the future, yet what Labour Members ask of us they singularly failed to deliver when in office.
The hon. Member for Great Grimsby (Mr. Mitchell), in characteristic form — perhaps because he was a reporter and is one of the few Opposition Members who still has a leaning towards the truth—got it right in the latest edition of The Political Quarterly, which concentrated on the future of the Left—a rather thin issue. He wrote:
The first and most indispensable requirement of the better society is growth. It is also Labour's, our greatest failure.
Labour's greatest failure is the Government's greatest success, a success which has brought us unprecedented economic strength, a strength which has enabled us to increase spending substantially in priority areas, such as health and education.

Mr. Gordon Brown: As my right hon. and hon. Friends have said during this debate, indeed as many Conservative Members have said, the final effect of the Budget will be to transfer £2,000 million to the 5 per cent. at the top who are already extremely rich. It will award £200 million more in inheritance tax reliefs to the 35,000 people who pay that tax. It will provide an additional £40 million for the small number who benefit from the business expansion scheme. It will offer £290 million more to those institutions and individuals who benefit from relief from capital gains tax liabilities. Yet 95 per cent. of the population will make no cash gain from the changes.
It is common ground that the tax cuts are taking place against the background of social security changes and the introduction, next month, of the social fund. Today, 5


million people claim supplementary benefit and from April they will be on income support—8 million people depend on those benefits. There are 16 million low-income families in this country, including 4 million children. In April, child benefit for 7 million mothers and 12 million children will be frozen, 1 million men and women will lose housing benefit and 4 million of our poorest households will have to pay rates at 20 per cent. for the first time, no matter how poor they are. The result will be that, in my constituency and in the constituencies of most hon. Members, low-paid workers and their families on earnings of less than £80 per week will lose between £1 and £2, even with the introduction of family credit and given the tax cuts in the Budget. Unemployed families with two children with an income of less than £80 per week will lose between £2 and £3 because of the withdrawal of single payments as a result of the introduction of the social fund. Those pensioners on income support who will receive £44·05 will automatically see whatever cash gain they make from the uprating of social security wiped out instantly as a result of the price rises in electricity, gas and other household necessities.
I estimate that 9 million people will be worse off as a combined result of the tax and social security changes over which the Chancellor and his Ministers have presided. The only conclusion that we can draw is that the tax cuts that have gone to the few at the very top are to be paid for by the withdrawal of benefits and the misery that that will cause to the poorest of our country.
Our argument is that the Budget will do nothing for justice, fairness and the social cohesion of this country. We also believe that the Budget will make absolutely no contribution to the efficiency and competitiveness of our economy. Conservative Members may argue that tax cuts, the ideology of incentives and social inequality are essential for the running of the modern economy and prerequisites for economic efficiency. However, if we are to be capable of achieving long-term, sustained economic and industrial success, the policies that would do most for social justice are investment in training and education, investment to effect the use of the resources of our regions and inner cities, investment in personal security and investment in the Health Service. Such policies are the most likely to help bring about a long-term, sustainable, secure growth in living standards and an improvement in the quality of life.
The first question that Conservative Members should have asked themselves about the Budget was, why is it, with all the tax cuts that have been achieved at the top since 1979, with all the supply-side incentives that have been available, with all the much-vaunted new opportunities from investment that have come from the £13,000 million of tax cuts at the top and even with the projected increases in the private sector capital investment in the Red Book this year, that Britain will still be investing less as a share of national income in the oil-rich 1980s than it did in the 1960s and 1970s?
Why will we still be investing less of a share of our national income on ourselves than any other industralised country with the exception of Belgium? Even after the Budget's tax cuts and after taking into account the Chancellor's predictions for rising private sector investment, why is Britain—the country that the Chancellor claims has the fastest growth rate in Europe—also the country in which investment as a share of national income is lower than in Spain, Portugal, Greece and Turkey?
With regard to our productive industries and especially our manufacturing industry, why, even after all the tax cuts since 1979 is the level of investment in our manufacturing industry 10 per cent. below what it was when the Government came to power? Why has no other country in Europe had such a low level of manufacturing investment or seen such a fall in investment since 1979?
The least that might have been expected from the tax cuts at the top end in 1979, was that they would have increased the level of manufacturing investment in our economy. In 1988, with manufacturing investment still 10 per cent. below what it was in 1979, the best that can be said for a new round of supply side tax cuts at the very top is that they might just return our investment levels in manufacturing to the 1979 level.
Is it not the case that those countries with higher tax rates than ours, such as Japan, have been investing more and that those countries with lower tax rates than ours —at least until last week—such as America, have been investing the same as us?
As tax cuts at the top end have not produced the level of investment that we need in our economy, why did the Chancellor not use the Budget to bridge the investment gap to make up the investment shortfall? There should be investment in training and education, where we are now falling behind not just Germany and Japan, but Korea and Taiwan. There should be investment in research and development on which we spend half as much as Germany and Japan. There should be investment in our regions and cities, where manufacturing investment levels in real terms in the north, Yorkshire, the north-west, Scotland and Wales are still 20 per cent. and in some cases 35 per cent. below the 1979 level. It makes absolutely no sense to have high and persistent unemployment, forced emigration, depopulation from the north, Scotland and Wales when at the same time, as Conservative Members have noticed, there is over-heating, congestion, skill shortages, pressure on the green belt and escalating house prices in so many parts of the south-east.
Is it not therefore perverse for the Chancellor to announce that he has balanced his Budget while at the same time he states in the Red Book that public sector capital investment actually fell last year—and this in a year in which he claimed that he had 5 per cent. growth?
The only investment that the Chancellor has apparently stimulated as a result of his Budget measures last Tuesday is investment in the business expansion scheme for property development. With subsidies for purchase, subsidies as a result of rent de-control and release from capital gains tax when properties are sold, the housing problems of the many are becoming the tax havens for the few. Small wonder that one firm of accountants said last week:
Rachman, one suspects, would not have been slow to take advantage of the scheme had it been around in the sixties.
The problem is that under the proposals Rachman will riot only be alive and well, but he and his colleagues will be subsidised to the tune of £40 million by the state.
What about the Chancellor's aims for a balanced Budget? In 1980 the test of success was to be M3; in 1982 it was the aggregate levels of monetary targets; in 1984 it was the total level of public expenditure; in 1986 the Budget was to have been judged by PSBR as a proportion of GDP. The Chancellor might have liked to have come to the House last Tuesday to claim that the proper criterion by which the Budget should be judged was the


exchange rate stability that he had achieved, but he was prevented from doing that by the Prime Minister. Instead he told us that we must judge the Budget and its success because he has balanced his books. I looked at what the Chancellor said last Tuesday:
At one time, it was regarded as the hallmark of good government to maintain a balanced budget; to ensure that, in time of peace, Government spending was fully financed by revenues from taxation, with no need for Government borrowing."—[Official Report, 15 March 1988; Vol. 129, c. 997.]
So, on the Chancellor's own definition, current taxation revenues should exceed current spending. His problem is that, even on his own definition—that is that current taxation revenues without privatisation receipts should exceed current expenditure — he did not balance the Budget last year or this year, and, he will not balance it in years to come. It would have been better if he had come to the House with modesty, and, rather than triumphantly proclaiming that he had balanced the Budget, referred us to an article some years ago, when he——

The Chancellor of the Exchequer (Mr. Nigel Lawson): When was it written?

Mr. Brown: I shall come to that. In the article, he attacked what he called that
school of economic commentators, who see mystical significance in an overall budget balance since this is a muddled amalgam of Gladstone and Keynes without the logical consistency of either".
The Chancellor rightly asked me when he wrote the article. I am happy to concede that he wrote it in 1962. I would not have mentioned it but for the fact that he has repeated the same views in the years since then. Did he say to the Treasury and Civil Service Select Committee in 1984 that his objective was a balanced Budget or that it was the crucial test of the health of the economy?
There is no particular magic about a balanced budget. It may trip off the tongue rather well"—
indeed, it did, four or five times last Tuesday—
but I do not think it necessary to have a balanced budget in order to achieve the objective of stable prices.
Our objection to the Chancellor's statement is that, although he may claim to have balanced the Budget, just about everything else in the economy and society was left unbalanced. There is an imbalance between investment and consumption, between the regions and the centre, between the rich and the poor and between private affluence and public squalor.
At the heart of the unbalanced Budget was the balance of payments problem, to which the right hon. Member for Old Bexley and Sidcup (Mr. Heath) referred. The balance of payments is bad and worsening, and it will be accentuated by the tax cuts, which will fuel imports. The problem will be made even more serious by the Prime Minister's determination to run high interest and exchange rates. The current account deficit is £1·5 billion this year and will be £4 billion next year. The manufacturing deficit is £6·5 billion this year and next year will be the worst in our 200-year history as an industrial nation — £8·5 billion. The Chancellor may think—

Mr. Redwood: Will the hon. Gentleman explain why we should believe his forecasts now when, in October 1986, he was reported in The Guardian as saying that Government policies had no chance of bringing down unemployment? If everything is so awful, why is

unemployment falling more quickly here than anywhere else in western Europe, and why do we have the fastest growth rate?

Mr. Brown: If the hon. Gentleman would read my articles and repeat them accurately, I might be prepared to answer. The Chancellor said that a balance of payments deficit—a manufacturing deficit — of £6·5 billion was perfectly manageable, and that a manufacturing deficit of £8·5 billion, which is what it would be, would be neither here nor there.
Does the Prime Minister agree with him about this? I know that the Prime Minister and the Chancellor do not see eye to eye on everything, except for the fact that this might be the Chancellor's last Budget, but do they see eye to eye on the manufacturing trade deficit? I must ask the Chancellor, who thinks that the manufacturing trade deficit is neither here nor there, to consider the words of the Prime Minister. When she was aspiring to become Prime Minister, the right hon. Lady said:
It is often said we must export or die. I would add: we must manufacture or die even more quickly.
That was not a Tory wet, a Labour Back Bencher or a member of a Select Committee in another place, but the then Leader of the Opposition. Does she and the Chancellor now say, with 30 per cent. of our manufacturing jobs lost, 50 per cent. of our cars, 50 per cent. of our washing machines, 50 per cent. of our fridges, 60 per cent. of many items of our furniture, 90 per cent. of our videos and 100 per cent. of our radios imported, with trade deficits in new industries far bigger than trade deficits ever were in the old ones, that we must manufacture or die even more quickly? Never, until this Government came to power, did we import more manufactured goods than we exported and never did we send more money abroad than we invested in manufacturing in many of our regions. Never before have we had whole areas of the country where people are without regular work because they are unemployed, in part-time work or in training schemes and who outnumber those employed in manufacturing industry, whether new or old.

Mr. Steel: Will the hon. Member support the Amalgamated Engineering Union to get 1,000 jobs for Scotland?

Mr. Brown: The right hon. Gentleman knows perfectly well our determination to get those jobs for Scotland. [Interruption.] If Conservative Members would stop trying to make party political points out of this issue and started to fight for the contract for Britain, we would be far better off.
The Budget is not just a missed opportunity for investment in our future, exports and jobs. It gave to the very few what could have provided a lifeline for the National Health Service. The British Medical Association report, which was published only a few days ago, said that 31 per cent. of consultants have had to cancel operations because of financial restrictions, that 3,000 hospital beds have been lost this year, and that the problems next year will be worse than the problems this year. What was the Government's response? Ruthlessly to exclude from expenditure in the Budget the one item on which the vast majority of the people agreed, and then to tell us that the Budget was about taxation and nothing to do with expenditure.
If that was the case, why did the Chancellor of the Exchequer in 1982 announce an extra £100 million for housing as a direct response to public pressure? Why did the Chancellor of the Exchequer in 1983 have to announce an extra £100 million to £200 million for industrial innovation? Why in 1985 did this Chancellor have to tell the House that an extra £75 million would have to be spent on the community programme, saying that it was not an unprecedented gesture that would never be repeated but that the prospects for expenditure revenue and borrowing are reviewed annually in the Budget?
If that could be done when there was less money to be spent, why could it not he done when the right hon. Gentleman had £4 billion to spend? The truth is not that the Government cannot spend on the Health Service but that they will not spend on the Health Service. Each health authority and each patient who is waiting for an operation should know that the money given to one top earner as a tax bonus—£500.000—would have paid for almost 1,000 operations.
The money given to the top 100 taxpayers could have paid for the cardiologists needed in our hospitals to treat heart diseases. The money given to the top 20,000 taxpayers, most of them millionaires, could have entirely eliminated the waiting lists for tonsils and hernia operations, and most of the list for hip joint operations. That is the scale of the redistribution in the Budget. The £2 billion given to the top 5 per cent. could have returned the National Health Service to the stability and security for which doctors and nurses have been calling. Why did the Chancellor opt for the unproven, unprovable, untested and untestable calls for tax cuts for the few, when that money could have been invested in the NHS to provide a lifeline for the benefit of all? This Budget cannot unite the nation because the one area for which the majority of people have been demanding help has been denied any money. It cannot unite the nation because, through his decision to opt for tax cuts, the right hon. Gentleman has chosen unfairness where he could have chosen to be fair.
The new state social fund will come into operation next month. I ask the Chancellor whether there is anything in need, in merit, in contribution to the community or in his insensate ideology that could ever justify someone on £50,000 a year receiving an additional £75 a week, someone on £70,000 receiving £150, and someone on £100,000 receiving £268, while the Government implement a policy of withdrawal of help from pensioners for their heating, from the disabled for laundry, clothing and baths, and from families for basic housing and household necessities?
A number of rulings by adjudication officers have already been made in advance of the social fund, and they will dominate its operation. While tax handouts go to the rich, what will happen to the destitute family looking for beds and bedding who were refused help, not because there was not sufficient money in any social fund but, as the Government adjudication officer told them, because the lack of bedding could be overcome by the family sleeping in their clothes? That happened in 1988, in advance of the social fund.

Mr. Neil Hamilton: Who said so?

Mr. Brown: The adjudication officer.
What about the family with school-age children, who——

Mr. Hamilton: Will the hon. Gentleman give a reference for his remarks?

Mr. Brown: The reference is the decisions of adjudication officers, which were reported in Hansard in a debate on 24 January.
While the rich become richer, a family with school-age children were told that, for people in good health, there was no medical necessity for cooked food. The adjudication officer turned down their request for a cooker on the ground that there was no necessity for cooked food. Parents who had applied for help to buy shoes for their young child were told that the child could get by with three pairs of socks. That is happening in 1988, in a civilised, decent society. Families must go without cookers because the Government say that they can get by without cooked food, and children must go to school without shoes because the Government say that socks are sufficient.
The £2 billion that the Government have given to the very rich could have provided a safety net for the maintenance of single payments. The £200 million lost in tax relief on inheritance tax could have provided for a rise in child benefit or prevented the cut in heating payments to the elderly. The £2 billion that will go the very rich could have rescued the NHS.
One considerable statistic should be left in the minds of Conservative Members. The top 100,000 people in this country—a small fraction of people—get far more in the tax cuts than has been given by the Chancellor to the majority of families, to 15 million people throughout the country. When we understand that fact, we understand clearly that this Budget was born out of greed, founded on indifference to the poor, built on selectivity towards the rich, skewed unashamedly towards the top 5 per cent. and dressed up in hypocrisy about tax cuts and the incentive effect that they will have. It is now revealed in its true colours—not as an epitaph for socialism in this country but, as long as this Government are in power, as an epitaph for social justice and an obituary for the fairness and decency that should lie at the centre of our social arrangements.
The motto of this Government is not, as they say. "God helps those who help themselves"; it is "God helps those whom He has already helped" and they do not worry about the rest of the people in this country.
The Government claim that they are the party of the family. Is there anything more harmful to family life than this Budget's failure to provide for decent hospitals, a decent Health Service, decent homes, decent schools a decent level of child benefit, and a decent opportunity for people to work?
No Budget this century has given so much to so few people. No Budget this century has seen such a huge redistribution of wealth from poor to rich. No Budget this century has so offended the decent instincts of the majority of people who are far more altruistic and far less selfish than the faction that now rules over us. This Budget——

Mr. Nicholas Bennett: rose——

Mr. Brown: This Budget—[interruption.]

Mr. Bennett: On a point of order, Mr. Speaker.

Mr. Speaker: Order. Is it a point of order, or is it just because the hon. Gentleman did not get in?

Mr. Bennett: The point of order, Mr. Speaker, is that the hon. Member for Dunfermline, East (Mr. Brown) quoted a statement from 24 January. We have checked, and that was a Sunday.

Mr. Speaker: Order. That does not seem to me to be a point of order.

Mr. Brown: We now know who the rowdy elements in this House are — a rowdy element in defence not of fairness, but of injustice, unfairness and inequality throughout the country.
No Budget has so offended the decent instincts of the majority of British people. The Budget cannot unite the people of this country because it deliberately set out to divide the people of this country.
This is the Government who, even when they have the cash, even when they know the need, and even when they made promises about what they would do for the Health Service, cannot bring themselves to afford the poor, the sick, the disabled and the unemployed in our society. The truth is that this country can no longer afford the price that it is paying for this Government.

The Chancellor of the Exchequer (Mr. Nigel Lawson): I shall just say this about what the hon. Member for Dunfermline, East (Mr. Brown) has been saying. It is an impertinence for him to say that the Government are doing nothing for the poor, the sick, the disabled and the needy, when public expenditure on social security is already running at far higher levels under this Government than it ever did under that of the Labour party, and the increase—[Interruption.]

Mr. Speaker: Order.

Mr. Lawson: The increase in social security spending that is planned for this coming year, despite falling unemployment, is £2,000 million.
The hon. Gentleman also talked about the rowdy element in the House. During the debate there has been a considerable amount of disquiet, expressed notably by my right hon. Friends the Members for Worthing (Mr. Higgins) and for Woking (Mr. Onslow), about the appalling and unprecedented scenes which we witnessed in the Chamber during the Budget debate. During one of those interruptions I recalled the motto uttered on one memorable and turbulent occasion in the House of Commons by our former colleague, Admiral Morgan-Giles, for many years the Member of Parliament for Winchester. He drew himself to his full height and said:
Pro bono publico: no bloody panico.

Mr. George Foulkes: Will the Chancellor give way?

Mr. Lawson: I have only just started. That is the principle on which I have based economic policy throughout my time as Chancellor of the Exchequer and it has served this country fairly well.
The House of Commons will deliver its verdict on the Budget in the Division Lobbies tonight. But the Budget has already attracted unprecedented comment from around the world, where it has been seen as reinforcing the high standing which Britain, under the leadership of my right hon. Friend the Prime Minister, now has in the Western world. It is a far cry indeed from the tones of

sorrow and pity which we received from the rest of the world during the period of the Labour Government's desperate attempts to shore up a declining economy.
In Japan, for example, one of the main papers gives prominence to what it calls "the Thatcher miracle", and another to,
a Budget too bold for the Japanese Government",
while the Japanese equivalent to the Financial Times refers to the changing image of Britain as now being a country of individual enterprise.

Mr. Morgan: rose—

Mr. Lawson: In the United States, The Wall Street Journal in an editorial observed that
Britain has returned to the lead in the global swing towards free economies and pro-growth policies based on individual initiative.
In France, Liberation called the Budget
the most fundamental and most daring Budget since Margaret Thatcher came to power",
set against the background of
the exceptional dynamism of the British economy.
In Germany, Handelsblatt declared that
the once sick man of Europe has become the most dynamic economic nation in Europe.
So much for the view expressed by the hon. Member for Dagenham (Mr. Gould) about the economy and the Budget alike.

Mr. Morgan: Will the Chancellor tell the House whether the Japanese newspaper went on to explain whether it was proposing that the Japanese Government follow his lead of reducing top tax rates from 60 per cent. to 40 per cent., when Japan has a top tax rate of 78 per cent. and a higher growth rate than the United Kingdom?

Mr. Lawson: Not only do the Japanese plan to reduce the top tax rate, but all the Japanese newspapers stated that in forming their tax reform proposals the Japanese Government would do well to study carefully what has been done in this Budget in Britain.

Mr. Harry Ewing: I am grateful to the Chancellor, because I realise that he is generous to give way. Did any of those newspaper comments refer to the fact that the wealth that the Chancellor is boasting about has been gained at the expense of an expectant mother from Reading who was hawked round 25 hospitals before she was finally admitted and that one of the children to whom she gave birth died? Did any of the newspapers mention that fact?

Mr. Lawson: I clearly should not have given way to the hon. Gentleman. He knows perfectly well that the increase that I announced in November for spending on the Health Service was the biggest increase that has ever been announced in any year.
But important though this Budget is, it is even more important that it is not seen in isolation. For this Budget represents a continuation of the policies which we have pursued consistently for nearly nine years, and which we will continue to pursue—a continuation of the steps that we have taken in nine previous Budgets, and of the major reforms that we have introduced in other fields, too, all of them designed to encourage and reward enterprise and so to liberate the energies of the British people.
The tax changes in this Budget consolidate Britain's move from a high-tax country to a low-tax country, at all levels. Since 1979, the top rate of income tax has been cut from 83 per cent. to 40 per cent. The basic rate has been


cut from 33 per cent. to 25 per cent. The corporation tax rate has been cut from 52 per cent. to 35 per cent. The small companies' rate has been cut from 42 per cent. to 25 per cent., arid the 15 per cent. additional tax on savings income has been abolished altogether.

Ms. Hilary Armstrong: Will there be any change in the share of GDP that is taken in taxation?

Mr. Lawson: Yes, I hope that over a period of years we shall indeed get it down.
But these dramatic changes in taxation need to be seen not as a reward, but as a challenge — a challenge to British businessmen. The reductions in tax rates, coupled with the reform of trade union law, provide an unparalleled opportunity for British firms to compete with the best in the world, and to succeed.

Mr. Nicholas Fairbairn: rose——

Mr. Lawson: The nation now looks to them not merely to do better than they have ever done before, but to outpace those overseas, for there is still a great deal to be done to make good the ground lost in the 1960s and the 1970s.

Mr. Fairbairn: rose— —

Mr. Speaker: Order. If the Chancellor does not give way, the hon. and learned Member must not persist.

Mr. Lawson: And the British people look to them, too, to play their full part in the social field—in the inner cities and in other areas where they can often be far more effective than bureaucratic agencies. I am confident that British business will live up to this challenge. I am confident that, just as it responded so well to the challenge of adversity during a world recession, so it will respond to the challenge of opportunity. For it is already clear that the policies that we have been pursuing have brought about a profound cultural change in this country. That, indeed, is what it is all about. For that cultural change is the only route to the economic success that we all wish to see, and which is no longer promise but reality.
No longer do people accept that economic policy should be about regulating everyone's lives and imposing penal tax rates, in the illusion that that will benefit those on lower incomes. Instead, it is now widely recognised except on the Opposition Benches that one cannot make the poor rich by making the rich poor and that there are enormous benefits in getting the state off people's backs, in transferring decision-making from the state to the people. And it is now abundantly clear that giving greater freedom and greater incentives has removed the shackles that have held back Britain for so many years and has liberated a great surge in enterprise.

Mr. Eric S. Heller: The right hon. Gentleman says that the tax cuts will lead to his friends in the City and industrialists investing more and thereby helping to make the economy better and to bring unemployment down. Supposing it does not lead to the investment and they use that money for more holidays abroad and so on. What will the Chancellor do then?

Mr. Lawson: The policy that we have been pursuing has already brought economic success. This country is now experiencing an economic miracle, comparable in significance to that previously enjoyed by West Germany and still enjoyed by Japan. As for Japan, which the hon.

Member for Dagenham mentioned, the Socialist party has been in uninterrupted opposition there for the past 33 years—arguably the most important single ingredient of economic success.

Mr. Fairbairn: Does my right hon. Friend appreciate that the miracle of which he speaks and the prosperity and freedom that we have has been destroyed in Scotland by the bigotry of the Labour party and the unions that they support which has denied to Dundee, to Perthshire and the rest of Scotland the Ford development of the future?

Mr. Lawson: I agree entirely with what my hon. and learned Friend says about the criminal shortsightedness of the Transport and General Workers Union in Dundee. We are still waiting for the Leader of the Opposition to make his position clear, but he is not prepared to say anything.

Mr. Campbell-Savours: rose—

Mr. Lawson: No, I shall give way only to the Leader of the Opposition.
In his speech last Wednesday, the right hon. and learned Member for Monklands, East (Mr. Smith) was reduced to referring disparagingly to a "short-term boom". The Leader of the Opposition, in an article in The Sun, called it a "boomlet". Seven years of steady growth at an average of 3 per cent. a year and it is callecl a "boomlet". The Labour Government did not achieve :3 per cent. growth in a single year—not once.

Mr. Neil Kinnock: Would the Chancellor of the Exchequer be good enough to explain, first, why is that in the years of Conservative rule the amount of domestic debt has gone up from £80 billion to £280 billion and whether he thinks that that might have had something to do with what he describes as a recovery? Secondly, when does he expect to get the tax burden down by the £16 billion necessary to get it back to the level that the Conservative Government inherited in 1979? Thirdly, on the basis of present policies, when does he expect to turn the £8 billion balance of trade deficit into the £5 billion surplus that they inherited in 1979?

Mr. Lawson: I gave way to the right hon. Gentleman so that he could make his position about the scandal of Dundee absolutely plain. He totally failed to answer that point.
As for inflation, which the Labour party never mentions, while we are determined to get inflation down further, what we are now talking about is getting it down from something between 3 and 4 per cent. That can be contrasted with a Labour Government under whom the lowest rate of inflation ever achieved was more than 8 per cent., with an average of more than 15. When Labour Members claim that this Budget is unfair, I say this to them. They can argue till the cows come home about whether it is fair to take 60, 50, or 40 per cent. of a man's salary away from him in taxation. But what is beyond dispute is the crowning unfairness of 15 per cent. inflation to every person in the land.
The benefits of sound and consistent policies are now being felt throughout the economy—in every region, in every country and in every industry. Unemployment has fallen by half a million over the last year, faster than in any other major country, and our unemployment rate is now lower than that in any other major European country, min h the exception of Germany.
This success has been achieved by rejecting the idea that the state is the engine of growth, and that the only way to stimulate the economy is by running ever-larger fiscal deficits. We saw what that led to in the 1970s. It led to inflation spiralling out of control and to the currency crashing, until there was no choice but to slam the engines into reverse, with deep cuts in public expenditure and savage tax increases. What we have done is to adopt a policy of steadily reducing Government borrowing, and we have now reached the logical conclusion of a balanced Budget.
Our legacy to future generations will not be an increasing burden of debt interest, but one which falls as a proportion of national income. This is already allowing us to spend more on priority services—including health — while keeping to our overall objective of reducing public expenditure as a share of national income.
What has brought us to this position is the virtuous circle of lower borrowing and lower tax rates. Lower borrowing gets the state out of the way while lower tax rates give every incentive for the private sector to expand. That in turn generates the higher revenues which have again allowed us to achieve the hat-trick of lower tax rates, higher public spending and lower borrowing — indeed, the elimination of borrowing altogether.
It is nonsense for the Labour party to make fanciful suggestions about what it would have done with the revenues if it had been in government. For the plain fact is that had it been in government the revenues would never have been there in the first place. They were not in the 1960s, they were not in the 1970s, and they would not be now, either.
A crucial part of achieving this virtuous circle is the pursuit of tax reforms that reward and encourage enterprise, something which is completely alien to Labour's philosophy. We do not have to theorise about the benefits of tax reform. They are vividly illustrated by the reforms to corporation tax which I introduced in 1984. The principles of lowering tax rates and of reducing or abolishing unwarranted tax breaks have been applied consistently since 1979. They have served the economy well.
On capital gains tax, the system that we inherited bit harshly on inflationary gains made in the 1970s. My predecessor was able to make a start on rectifying this in his Budget in 1982. I extended the indexation provisions in 1985, and in this year's Budget I was able to announce the logical conclusion that gains made before 1982 should be exempt from tax altogether. This will benefit the economy by unlocking assets bought before 1982, which people have been sitting on simply to avoid a penal tax charge on purely paper gains. But at the same time the alignment of the rates of tax on income and capital gains, which was made possible by the simplification of the income tax rates, reduces both the distortion of investment decisions and the scope for higher rate tax payers in particular to convert income into gains to minimise their tax liability.
In this Budget, it was right to concentrate on personal taxation — and on income tax in particular. We had made some substantial progress in previous Budgets, but it was clear that this was an area ripe for reform.
I believe that the whole House, and indeed the whole country, has welcomed the reform that I announced in the

tax treatment of married women. The existing system, with the wife's income treated for tax purposes as belonging to her husband, had lasted for 180 years. It had become wholly indefensible. I decided that the time had come to act. My proposals will for the first time ensure complete privacy and independence for married women in their tax affairs. Of those married women who will gain financially from the introduction of independent taxation — the majority of whom, incidentally, will be elderly—nearly three quarters have incomes of less than £5,000 a year.

Mr. Dick Douglas: How does the Chancellor reconcile his division of man and wife here with the provision in the poll tax legislation for husband and wife to be jointly and severally responsible for the payment of that tax?

Mr. Lawson: It is still independent taxation in that context, too.
At the same time, it was clearly right to eliminate the so-called tax penalties on marriage and that I have also done.
It is, I must say, the height of effrontery for Opposition spokesmen to complain that those below the tax threshold cannot benefit from a Budget that reduces income tax. Are they arguing that we should have reduced thresholds in real terms, instead of raising them? That is what they did when they were in office, when the single person's tax threshold was reduced by 20 per cent. in real terms.
We have now done something which has never been done before : we have cut income tax in seven successive Budgets — which, under this Government, means seven successive years. Compare Budget day now with the sense of apprehension and dread with which, under the last Government, the British people waited to find out what fate would befall them in March, and again in July and again in November.
This year, we were able to achieve our declared goal of reducing the basic rate to 25 per cent. — from a third under the last Labour Government to a quarter now—and I have pledged that we will reduce it further to 20 per cent. as soon as it is prudent and sensible to do so.
The cut in the basic rate, together with the double indexation of personal allowances, accounted for three quarters of the cost of the income tax package in the Budget in the coming year. So much for the claim that 95 per cent. of the population would not benefit from the Budget. That is poppycock.
It was clearly right—I know that the Opposition are concerned about this—to reduce the higher rates, too. All the experience, in this country and overseas, has demonstrated the futility of levying high tax rates in some misguided search for social justice. It is clear that all that does is encourage distortions and discourage enterprise.
With high tax rates, far too much wasted effort is put into finding ever more complicated ways of avoiding tax and, indeed, into emigration. No one benefits except tax accountants and tax lawyers. It is far better both to cut higher rates of tax and to sweep away as many as possible of the shelters and tax breaks which were an inescapable part of a high tax regime. And that it what I have done in this Budget. The changes in the tax regime for forestry, for covenants, for company cars, for golden handshakes, and indeed for capital gains, all sweep away tax breaks which have no place when tax rates are lower.
Our experience since 1979 clearly demonstrates the results. In 1978–79, the top 5 per cent. of taxpayers


contributed 24 per cent. of income tax revenues. This year, the top 5 per cent. will contribute 29 per cent. of income tax revenues.
All around the world, top tax rates are coming down. Even the Labour Governments in Australia and New Zealand have embarked on that road, particularly New Zealand—let me tell the hon. Member for Dagenham— where they have already brought the top rate down from 60 per cent. to 48 per cent., and now plan to bring it down to 33 per cent. this October. Only the Labour party here claims that high tax rates are a good thing. Labour completely fail to understand the basic points. They said in their election manifesto that they would reverse the tax cuts for the top 5 per cent. to help pay for their programme. They do not realise that the top 5 per cent. are paying more, not less. In real terms they are paying £3 billion more. That is how the programmes are being paid for.
All that motivates the Opposition is envy and spite. They still cannot say where they would set the top rate. Reducing income tax gives people more freedom and more effective choice.

The Lord President of the Council and Leader of the House of Commons (Mr. John Wakeham): rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly and agreed to

1. AMENDMENT OF THE LAW

Resolved,
That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further

provision in connection with finance; but this Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

(a) for zero-rating or exempting any supply;
(b) for refunding any amount of tax;
(c) for varying the rate of that tax otherwise than in relation to all supplies and importations; or
(d) for relief other than relief applying to goods of whatever description or services of whatever description.

Mr. Speaker: I am now required under Standing Order No. 50(3) to put successively, without further debate, the Question on each of the Ways and Means motions Nos. 2 to 49 and on the Motions for procedure and the Finance (No. 2) Bill [Money], on all of which the Bill is to be brought in. Instead of reading out each motion, I propose to follow the procedure used in recent years, that is to say, I shall read first the title of the motion and then simply put the Question that the motion be agreed to.

2. BEER

Resolved,
That, as from 6 o'clock in the evening of 15th March 1988, the rates of duty specified in section 36 of the Alcoholic Liquor Duties Act 1979 shall be increased—

(a) from £25·80 for each hectolitre to £27·00 for each hectolitre; and
(b) from £0·86 for each additional degree of original gravity exceeding 1030 degrees to £0·90 for each such additional degree.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

3. WINE AND MADE-WINE

Resolved,
That as from 6 o'clock in the evening of 15th March 1988, the rates of duty under sections 54 and 55 of the Alcoholic Liquor Duties Act 1979 shall be as follows—

Description of wine or made-wine
Rates of duty per hectolitre



£


(1) Wine or made-wine of a strength not exceeding 15 per cent. and not being sparkling … … … …
102·40


(2) Sparkling wine or sparkling made-wine of a strength not exceeding 15 per cent.… … … …
169·10


(3) Wine or made-wine of a strength exceeding 15 per cent. but not exceeding 18 per cent. … … …
176·60


(4) Wine or made-wine of a strength exceeding 18 per cent. but not exceeding 22 per cent. … … …
203·70


(5) Wine or made-wine of a strength exceeding 22 per cent. … … … … … … … … … … …
203·70 plus



£15·77 for every 1 per cent. or part of 1 per cent. in excess of 22 per cent.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

4. CIDER

Resolved,
That, as from 6 o'clock in the evening of 15th March 1988, the rates of duty specified in section 62(1) of the Alcoholic Liquor Duties Act 1979 shall be increased from £15·80 per hectolitre to £17·33 per hectolitre.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

5. TOBACCO PRODUCTS

Resolved,
That, as from 18th March 1988, the rates of duty on cigarettes, cigars and hand-rolling tobacco specified in Schedule 1 to the Tobacco Products Duty Act 1979 shall be increased—

(a) in the case of cigarettes, to an amount equal to 21 per cent. of the retail price plus £31·74 per thousand cigarettes;
(b) in the case of cigars, to £48·79 per kilogram; and
(c) in the case of hand-rolling tobacco, to £51·48 per kilogram.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

6. HYDROCARBON OIL

Question put,
That, as from 6 o'clock in the evening of 15th March 1988—

(1) The rates of duty specified in section 6(1) of the Hydrocarbon Oil Duties Act 1979 shall be increased—

(a) in the case of light oil, from £0·1938 to £0·2044 a litre; and
(b) in the case of heavy oil, from £0·1639 to £0·1729 a litre.

(2) The rate of rebate of duty specified in section 13A of that Act (rebate on unleaded petrol) shall be increased from £0·0096 to £0·0202 a litre.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

The House divided: Ayes 339, Noes 33.

Division No. 217]
[10 pm


AYES


Adley, Robert
Bottomley, Mrs Virginia


Aitken, Jonathan
Bowden, A (Brighton K'pto'n)


Alexander, Richard
Bowden, Gerald (Dulwich)


Alison, Rt Hon Michael
Bowis, John


Allason, Rupert
Boyson, Rt Hon Dr Sir Rhodes


Amess, David
Braine, Rt Hon Sir Bernard


Amos, Alan
Brandon-Bravo, Martin


Arbuthnot, James
Brazier, Julian


Arnold, Jacques (Gravesham)
Bright, Graham


Arnold, Tom (Hazel Grove)
Brittan, Rt Hon Leon


Ashby, David
Brooke, Rt Hon Peter


Aspinwall, Jack
Brown, Michael (Brigg &amp; Cl't's)


Atkins, Robert
Browne, John (Winchester)


Baker, Rt Hon K. (Mole Valley)
Bruce, Ian (Dorset South)


Baker, Nicholas (Dorset N)
Buchanan-Smith, Rt Hon Alick


Baldry, Tony
Buck, Sir Antony


Banks, Robert (Harrogate)
Budgen, Nicholas


Barnes, Mrs Rosie (Greenwich)
Burns, Simon


Batiste, Spencer
Burt, Alistair


Beaumont-Dark, Anthony
Butcher, John


Bellingham, Henry
Butler, Chris


Bendall, Vivian
Butterfill, John


Bennett, Nicholas (Pembroke)
Carlisle, John, (Luton N)


Benyon, W.
Carlisle, Kenneth (Lincoln)


Bevan, David Gilroy
Carrington, Matthew


Biffen, Rt Hon John
Carttiss, Michael


Biggs-Davison, Sir John
Cartwright, John


Blackburn, Dr John G.
Cash, William


Blaker, Rt Hon Sir Peter
Channon, Rt Hon Paul


Bonsor, Sir Nicholas
Chapman, Sydney


Bottomley, Peter
Chope, Christopher






Churchill, Mr
Hicks, Mrs Maureen (Wolv' NE)


Clark, Hon Alan (Plym'th S'n)
Higgins, Rt Hon Terence L.


Clark, Dr Michael (Rochford)
Hind, Kenneth


Clark, Sir W. (Croydon S)
Hogg, Hon Douglas (Gr'th'm)


Clarke, Rt Hon K. (Rushcliffe)
Holt, Richard


Colvin, Michael
Hordern, Sir Peter


Conway, Derek
Howard, Michael


Coombs, Anthony (Wyre F'rest)
Howarth, Alan (Strat'd-on-A)


Coombs, Simon (Swindon)
Howarth, G. (Cannock &amp; B'wd)


Cope, John
Howell, Ralph (North Norfolk)


Cormack, Patrick
Hughes, Robert G. (Harrow W)


Cran, James
Hunt, David (Wirral W)


Critchley, Julian
Hunt, John (Ravensbourne)


Currie, Mrs Edwina
Hunter, Andrew


Davies, Q. (Stamf'd &amp; Spald'g)
Hurd, Rt Hon Douglas


Davis, David (Boothferry)
Irvine, Michael


Day, Stephen
Irving, Charles


Devlin, Tim
Jack, Michael


Dickens, Geoffrey
Jackson, Robert


Dorrell, Stephen
Janman, Tim


Douglas-Hamilton, Lord James
Jessel, Toby


Dover, Den
Johnson Smith, Sir Geoffrey


Dunn, Bob
Jones, Gwilym (Cardiff N)


Durant, Tony
Jones, Robert B (Herts W}


Eggar, Tim
Jopling, Rt Hon Michael


Emery, Sir Peter
Kellett-Bowman, Dame Elaine


Evans, David (Welwyn Hatf'd)
King, Roger (B'ham N'thfield)


Evennett, David
Kirkhope, Timothy


Fairbairn, Nicholas
Knapman, Roger


Fallon, Michael
Knight, Greg (Derby North)


Farr, Sir John
Knight, Dame Jill (Edgbaston)


Favell, Tony
Knowles, Michael


Fenner, Dame Peggy
Knox, David


Field, Barry (Isle of Wight)
Lamont, Rt Hon Norman


Fookes, Miss Janet
Lang, Ian


Forman, Nigel
Latham, Michael


Forsyth, Michael (Stirling)
Lawrence, Ivan


Forth, Eric
Lawson, Rt Hon Nigel


Fowler, Rt Hon Norman
Lee, John (Pendle)


Franks, Cecil
Leigh, Edward (Gainsbor'gh)


Freeman, Roger
Lennox-Boyd, Hon Mark


French, Douglas
Lester, Jim (Broxtowe)


Fry, Peter
Lightbown, David


Gale, Roger
Lilley, Peter


Gardiner, George
Lloyd, Sir Ian (Havant)


Gill, Christopher
Lloyd, Peter (Fareham)


Gilmour, Rt Hon Sir Ian
Lord, Michael


Glyn, Dr Alan
Luce, Rt Hon Richard


Goodhart, Sir Philip
Lyell, Sir Nicholas


Goodlad, Alastair
McCrindle, Robert


Goodson-Wickes, Dr Charles
Macfarlane, Sir Neil


Gorman, Mrs Teresa
MacGregor, Rt Hon John


Gorst, John
MacKay, Andrew (E Berkshire)


Gow, Ian
Maclean, David


Gower, Sir Raymond
McLoughlin, Patrick


Grant, Sir Anthony (CambsSW)
McNair-Wilson, M. (Newbury)


Greenway, Harry (Ealing N)
McNair-Wilson, P. (New Forest)


Greenway, John (Ryedale)
Madel, David


Gregory, Conal
Major, Rt Hon John


Griffiths, Sir Eldon (Bury St E')
Malins, Humfrey


Griffiths, Peter (Portsmouth N)
Mans, Keith


Grist, Ian
Maples, John


Ground, Patrick
Marland, Paul


Grylls, Michael
Marshall, John (Hendon S)


Hamilton, Hon Archie (Epsom)
Marshall, Michael (Arundel)


Hamilton, Neil (Tatton)
Martin, David (Portsmouth S)


Hampson, Dr Keith
Mates, Michael


Hanley, Jeremy
Maude, Hon Francis


Hannam, John
Maxwell-Hyslop, Robin


Hargreaves, A. (B'ham H'll Gr')
Mayhew, Rt Hon Sir Patrick


Hargreaves, Ken (Hyndburn)
Mellor, David


Harris, David
Meyer, Sir Anthony


Hawkins, Christopher
Miller, Hal


Hayes, Jerry
Mills, Iain


Hayhoe, Rt Hon Sir Barney
Miscampbell, Norman


Hayward, Robert
Mitchell, Andrew (Gedling)


Heath, Rt Hon Edward
Mitchell, David (Hants NW)


Heathcoat-Amory, David
Moate, Roger


Heddle, John
Monro, Sir Hector


Heseltine, Rt Hon Michael
Montgomery, Sir Fergus





Moore, Rt Hon John
Speed, Keith


Morris, M (N'hampton S)
Speller, Tony


Morrison, Hon Sir Charles
Spicer, Sir Jim (Dorset W)


Moss, Malcolm
Spicer, Michael (S Worcs)


Moynihan, Hon Colin
Squire, Robin


Neale, Gerrard
Stanbrook, Ivor


Needham, Richard
Steen, Anthony


Nelson, Anthony
Stern, Michael


Neubert, Michael
Stevens, Lewis


Newton, Rt Hon Tony
Stewart, Allan (Eastwood)


Nicholson, David (Taunton)
Stewart, Andy (Sherwood)


Nicholson, Emma (Devon West)
Stewart, Ian (Hertfordshire N)


Onslow, Rt Hon Cranley
Stokes, John


Oppenheim, Phillip
Stradling Thomas, Sir John


Owen, Rt Hon Dr David
Sumberg, David


Page, Richard
Tapsell, Sir Peter


Paice, James
Taylor, Ian (Esher)


Parkinson, Rt Hon Cecil
Taylor, John M (Solihull)


Patnick, Irvine
Tebbit, Rt Hon Norman


Patten, John (Oxford W)
Temple-Morris, Peter


Pattie, Rt Hon Sir Geoffrey
Thatcher, Rt Hon Margaret


Pawsey, James
Thompson, D. (Calder Valley)


Peacock, Mrs Elizabeth
Thompson, Patrick (Norwich N)


Porter, Barry (Wirral S)
Thorne, Neil


Porter, David (Waveney)
Thornton, Malcolm


Portillo, Michael
Thurnham, Peter


Powell, William (Corby)
Townend, John (Bridlington)


Price, Sir David
Townsend, Cyril D. (B'heath)


Raffan, Keith
Tracey, Richard


Raison, Rt Hon Timothy
Tredinnick, David


Rathbone, Tim
Trippier, David


Redwood, John
Trotter, Neville


Renton, Tim
Twinn, Dr Ian


Rhodes James, Robert
Vaughan, Sir Gerard


Rhys Williams, Sir Brandon
Waddington, Rt Hon David


Riddick, Graham
Wakeham, Rt Hon John


Ridley, Rt Hon Nicholas
Waldegrave, Hon William


Ridsdale, Sir Julian
Walden, George


Roberts, Wyn (Conwy)
Walker, Bill (T'side North)


Roe, Mrs Marion
Walker, Rt Hon P. (W'cester)


Rossi, Sir Hugh
Waller, Gary


Rost, Peter
Walters, Dennis


Rowe, Andrew
Ward, John


Rumbold, Mrs Angela
Wardle, Charles (Bexhill)


Ryder, Richard
Warren, Kenneth


Sackville, Hon Tom
Watts, John


Sainsbury, Hon Tim
Wheeler, John


Sayeed, Jonathan
Whitney, Ray


Scott, Nicholas
Widdecombe, Ann


Shaw, David (Dover)
Wilkinson, John


Shaw, Sir Giles (Pudsey)
Wilshire, David


Shaw, Sir Michael (Scarb')
Wolfson, Mark


Shelton, William (Streatham)
Wood, Timothy


Shephard, Mrs G. (Norfolk SW)
Woodcock, Mike


Shepherd, Colin (Hereford)
Yeo, Tim


Shepherd, Richard (Aldridge)
Young, Sir George (Acton)


Shersby, Michael



Sims, Roger
Tellers for the Ayes:


Skeet, Sir Trevor
Mr. Robert Boscawen and


Smith, Tim (Beaconsfield)
Mr. Tristan Garel-Jones.


Soames, Hon Nicholas



NOES


Alton, David
Kirkwood, Archy


Ashdown, Paddy
Livsey, Richard


Beggs, Roy
McGrady, Eddie


Beith, A. J.
Maginnis, Ken


Bruce, Malcolm (Gordon)
Michie, Mrs Ray (Arg'l &amp; Bute)


Campbell, Menzies (Fife NE)
Molyneaux, Rt Hon James


Canavan, Dennis
Nellist, Dave


Carlile, Alex (Mont'g)
Ross, William (Londonderry E)


Fearn, Ronald
Skinner, Dennis


Forsythe, Clifford (Antrim S)
Smith, Cyril (Rochdale)


Gordon, Mildred
Smyth, Rev Martin (Belfast S)


Howells, Geraint
Steel, Rt Hon David


Hughes, Simon (Southwark)
Taylor, Matthew (Truro)


Jones, Ieuan (Ynys Môn)
Thomas, Dr Dafydd Elis


Kennedy, Charles
Walker, A. Cecil (Belfast N)


Kilfedder, James
Wall, Pat






Welsh, Andrew (Angus E)
Mr. Dafydd Wigley and



Mrs. Margaret Ewing.


Tellers for the Noes:

Question accordingly agreed to.

Mr. Speaker: May I have the leave of the House to put motions 7 to 10 together? There does not appear to be any objection to that being done.

7. VEHICLES EXCISE DUTY

Resolved,
That the Vehicles (Excise) Act 1971 ("the 1971 Act") and the Vehicles (Excise) Act (Northern Ireland) 1972 ("the 1972 Act") shall have effect, in relation to licences taken out after 15th March 1988, with the amendments set out below.
But this Resolution shall not authorise the making of amendments which would result in different provisions being in force in different parts of Great Britain.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

(1) In Part I of Schedule 1 to each Act (annual rate of duty on motor bicycles etc.), in paragraph 2 (concession for certain bicycles first licensed before 1933, or, in Northern Ireland, 1935)—

(a) in sub-paragraph (a), for the words "for which a licence was taken out before the beginning of the year" there shall be substituted the words "constructed before"; and
(b) in sub-paragraph (b), for the words "224 pounds" there shall be substituted the words "101.6 kilograms".

(2) In Part II of Schedule 4 to the 1971 Act (annual rates of duty on goods vehicles), for Tables A, A(1) and A(2) (rates for rigid goods vehicles having plated gross weight exceeding 12 tonnes) there shall be substituted the Tables set out below:

TABLE A


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12 TONNES PLATED GROSS WEIGHT GENERAL RATES


Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


tonnes
tonnes
£
£
£


12
13
410
320
320


13
14
570
340
340


14
15
740
340
340


15
17
1,130
340
340


17
19
—
540
340


19
21
—
730
340


21
23
—
1,000
490


23
25
—
1,780
690


25
27
—
—
1,110


27
29
—
—
1,630


29
30.49
—
—
2,680

TABLE A(1)


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12 TONNES PLATED GROSS WEIGHT RATES FOR FARMERS' GOODS VEHICLES


Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


tonnes
tonnes
£
£
£


12
13
245
190
190


13
14
340
205
205


14
15
445
205
205


15
17
680
205
205


17
19
—
325
205


19
21
—
440
205


21
23
—
600
295


23
25
—
1,070
415


25
27
—
—
665


27
29
—
—
980


29
30.49
—
—
1,610

TABLE A(2)


RATES OF DUTY ON RIGID GOODS VEHICLES EXCEEDING 12 TONNES PLATED GROSS WEIGHT RATES FOR SHOWMEN'S GOODS VEHICLES


Plated gross weight of vehicle
Rate of duty


1.
2.
3.
4.
5.


Exceeding
Not exceeding
Two axle vehicle
Three axle vehicle
Four or more axle vehicle


tonnes
tonnes
£
£
£


12
13
105
90
90


13
14
145
90
90


14
15
185
90
90


15
17
285
90
90


17
19
—
135
90


19
21
—
185
90


21
23
—
250
125


23
25
—
445
175


25
27
—
—
280


27
29
—
—
410


29
30.49
—
—
670

(3) The Tables set out above shall also be substituted for Tables A, A(1) and A(2) in Part II of Schedule 4 to the 1972 Act, but modified for that purpose by the substitution for any reference to a plated gross weight of a reference to a relevant maximum weight.

(4) In Part II of Schedule 5 to each Act (annual rates of duty on motor cars etc.), in column 1, for paragraph 1 (vehicles first registered before 1947) there shall be substituted.—

"1. Vehicles constructed before 1947."—[Mr. Lawson.]

8. VEHICLES EXCISE DUTY (EXCEPTIONAL LOADS, ETC.)

Resolved,
That the Vehicles (Excise) Act 1971 ("the 1971 Act") and the Vehicles (Excise) Act (Northern Ireland) 1972 ("the 1972 Act") shall have effect, as from 1st June 1988, with the amendments set out below.
But this Resolution shall not authorise the making of amendments which would result in different provisions being in force in different parts of Great Britain.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.

(1) In section 1(2) of each Act (charge of duty), for the words "the first five Schedules" there shall be substituted the words "Schedules 1 to 5".
(2) In Part I of Schedule 3 to each Act (annual rates of duty on tractors etc.), in paragraph 6 (definition of "haulage vehicle"), after the words "other than one" there shall be inserted the words "to which Schedule 4A to this Act applies or which is".
(3) In Part I of Schedule 4 to each Act (annual rates of duty on goods vehicles), in paragraph 15—

(a) in sub-paragraph (1), in the definition of "goods vehicle", after the word "means" there shall be inserted the words "subject to sub-paragraph (1A) below"; and
(b) after that sub-paragraph there shall be inserted—

(1A) In this Schedule 'goods vehicle' does not include a vehicle to which Schedule 4A to this Act applies.
(4) After Schedule 4 to the 1971 Act there shall be inserted—

SCHEDULE 4A ANNUAL RATES OF DUTY ON VEHICLES USED FOR CARRYING OR DRAWING EXCEPTIONAL LOADS

1. This Schedule applies to a vehicle—


(a)which is a heavy motor car used for the carriage of exceptional loads; or
(b) which is a heavy locomotive, light locomotive or motor tractor used to draw trailers carrying such loads,

and which, when so used, is authorised for use on roads by virtue of an order under section 42 of the Road Traffic Act 1972.

2. The annual rate of duty applicable to a vehicle to which this Schedule applies shall be £1,600.

3. Where a vehicle—

(a) to which this Schedule applies; and
(b) which would, but for paragraphs 5 and 15(1A) of Schedule 4 to this Act, be a goods vehicle of a description to which a higher rate of duty is applicable under this Act,

is at any time used on roads otherwise than as mentioned in paragraph 1 above, section 18 of this Act shall apply as if that vehicle were then being used in a manner or for a purpose which brings it within that description of vehicle.

4. In this Schedule—
'exceptional load' means a load which—

(a) by reason of its dimensions, cannot be carried by a heavy motor car or trailer, or a combination of a heavy motor car and trailer, which (in either case) complies in all respects with requirements of regulations under section 40 of the Road Traffic Act 1972; or
(b) by reason of its weight, cannot be carried by a heavy motor car or trailer, or a combination of a heavy motor car and trailer, which (in either case) has a total laden weight of not more than the specified amount and complies in all respects with such requirements;

'specified amount' means—

(a) in relation to any time before 1st October 1989, 32,520 kilograms;
(b) in relation to any time on or after that date, 38,000 kilograms;

and other expressions which are also used in the Road Traffic Act 1972 have the same meanings as in that Act.

(5) The provisions set out in paragraph (4) above shall also be inserted after Schedule 4 to the 1972 Act, but modified for that purpose by the substitution for any reference to the Road Traffic Act 1972, or to section 40 or 42 of that Act, of a reference to the Road Traffic (Northern Ireland) Order 1981, or to Article 28 or 29(3) of that Order.


(6) Section 2(1)(c) of the 1971 Act and section 2(1)(c) and (d) of the 1972 Act (seven day licences) shall cease to have effect.—[Mr. Lawson.]

9. VEHICLES EXCISE DUTY (RECOVERY VEHICLES)

Resolved,
That provision may be made amending paragraph 8 of Part 1 of Schedule 3 to each of the Vehicles (Excise) Act 1971 and the Vehicles (Excise) Act (Northern Ireland) 1972.—[Mr. Lawson.]

10. VALUE ADDED TAX (REGISTRATION)

Resolved,
That provision may be made as to registration and the cancellation of registrations under the Value Added Tax Act 1983.—[Mr. Lawson.]

11. INCOME TAX (CHARGE AND RATES FOR 1988–89)

Question put,
That—

(1) Income tax shall be charged for the year 1988–89—

(a) at the basic rate of 25 per cent, and
(b) in respect of so much of an individual's total income as exceeds £19,300, at the rate of 40 per cent.

(2) The additional rate income tax for the year 1988–89 shall be 10 per cent.
(3) Section 1(4) of the Income and Corporation Taxes Act 1988 (indexation) shall not apply for the year 1988–89.
(4) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 203 of the Act (pay as you earn) before 15th June 1988.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

The House divided: Ayes 335, Noes 223.

Division No. 218]
[10.15 pm


AYES


Adley, Robert
Brooke, Rt Hon Peter


Aitken, Jonathan
Brown, Michael (Grigg &amp; Cl't's)


Alexander, Richard
Browne, John (Winchester)


Alison, Rt Hon Michael
Bruce, Ian (Dorset South)


Allason, Rupert
Buchanan-Smith, Rt Hon Alick


Amess, David
Buck, Sir Antony


Amos, Alan
Budgen, Nicholas


Arbuthnot, James
Burns, Simon


Arnold, Jacques (Gravesham)
Burt, Alistair


Arnold, Tom (Hazel Grove)
Butcher, John


Ashby, David
Butler, Chris


Aspinwall, Jack
Butterfill, John


Atkins, Robert
Carlisle, John, (Luton N)


Baker, Rt Hon K. (Mole Valley)
Carlisle, Kenneth (Lincoln)


Baker, Nicholas (Dorset N)
Carrington, Matthew


Baldry, Tony
Carttiss, Michael


Banks, Robert (Harrogate)
Cash, William


Batiste, Spencer
Channon, Rt Hon Paul


Beaumont-Dark, Anthony
Chapman, Sydney


Bellingham, Henry
Chope, Christopher


Bendall, Vivian
Churchill, Mr


Bennett, Nicholas (Pembroke)
Clark, Hon Alan (Plym'th S'n)


Benyon, W.
Clark, Dr Michael (Rochford)


Bevan, David Gilroy
Clark, Sir W. (Croydon S)


Biggs-Davison, Sir John
Clarke, Rt Hon K. (Rushcliffe)


Blackburn, Dr John G.
Colvin, Michael


Blaker, Rt Hon Sir Peter
Conway, Derek


Bonsor, Sir Nicholas
Coombs, Anthony (Wyre F'rest)


Bottomley, Peter
Coombs, Simon (Swindon)


Bottomley, Mrs Virginia
Cope, John


Bowden, A (Brighton K'pto'n)
Cormack, Patrick


Bowden, Gerald (Dulwich)
Cran, James


Bowis, John
Critchley, Julian


Boyson, Rt Hon Dr Sir Rhodes
Currie, Mrs Edwina


Braine, Rt Hon Sir Bernard
Davies, Q. (Stamf'd &amp; Spald'g)


Brandon-Bravo, Martin
Davis, David (Boothferry)


Brazier, Julian
Day, Stephen


Bright, Graham
Devlin, Tim


Brittan, Rt Hon Leon
Dickens, Geoffrey





Dorrell, Stephen
Janman, Tim


Douglas-Hamilton, Lord James
Jessel, Toby


Dover, Den
Johnson Smith, Sir Geoffrey


Dunn, Bob
Jones, Gwilym (Cardiff N)


Durant, Tony
Jones, Robert B (Herts W)


Eggar, Tim
Jopling, Rt Hon Michael


Emery, Sir Peter
Kellett-Bowman, Dame Elaine


Evans, David (Welwyn Hatf'd)
King, Roger (B'ham N'thfield)


Evennett, David
Kirkhope, Timothy


Fairbairn, Nicholas
Knapman, Roger


Fallon, Michael
Knight, Greg (Derby North)


Farr, Sir John
Knight, Dame Jill (Edgbaston)


Favell, Tony
Knowles, Michael


Fenner, Dame Peggy
Knox, David


Field, Barry (Isle of Wight)
Lamont, Rt Hon Norman


Fookes, Miss Janet
Lang, Ian


Forman, Nigel
Latham, Michael


Forsyth, Michael (Stirling)
Lawrence, Ivan


Forth, Eric
Lawson, Rt Hon Nigel


Fowler, Rt Hon Norman
Lee, John (Pendle)


Franks, Cecil
Leigh, Edward (Gainsbor'gh)


Freeman, Roger
Lennox-Boyd, Hon Mark


French, Douglas
Lester, Jim (Broxtowe)


Fry, Peter
Lightbown, David


Gale, Roger
Lilley, Peter


Gardiner, George
Lloyd, Sir Ian (Havant)


Gill, Christopher
Lloyd, Peter (Fareham)


Gilmour, Rt Hon Sir Ian
Lord, Michael


Glyn, Dr Alan
Luce, Rt Hon Richard


Goodhart, Sir Philip
Lyell, Sir Nicholas


Goodlad, Alastair
McCrindle, Robert


Goodson-Wickes, Dr Charles
Macfarlane, Sir Neil


Gorman, Mrs Teresa
MacGregor, Rt Hon John


Gorst, John
MacKay, Andrew (E Berkshire)


Gow, Ian
Maclean, David


Gower, Sir Raymond
McLoughlin, Patrick


Grant, Sir Anthony (CambsSW)
McNair-Wilson, M. (Newbury)


Greenway, Harry (Ealing N)
McNair-Wilson, P. (New Forest)


Greenway, John (Ryedale)
Madel, David


Gregory, Conal
Major, Rt Hon John


Griffiths, Sir Eldon (Bury St E')
Malins, Humfrey


Griffiths, Peter (Portsmouth N)
Mans, Keith


Grist, Ian
Maples, John


Ground, Patrick
Marland, Paul


Grylls, Michael
Marshall, John (Hendon S)


Hamilton, Hon Archie (Epsom)
Marshall, Michael (Arundel)


Hamilton, Neil (Tatton)
Martin, David (Portsmouth S)


Hampson, Dr Keith
Mates, Michael


Hanley, Jeremy
Maude, Hon Francis


Hannam, John
Maxwell-Hyslop, Robin


Hargreaves, A. (B'ham H'll Gr')
Mayhew, Rt Hon Sir Patrick


Hargreaves, Ken (Hyndburn)
Mellor, David


Harris, David
Meyer, Sir Anthony


Hawkins, Christopher
Miller, Hal


Hayes, Jerry
Mills, Iain


Hayhoe, Rt Hon Sir Barney
Miscampbell, Norman


Hayward, Robert
Mitchell, Andrew (Gedling)


Heath, Rt Hon Edward
Mitchell, David (Hants NW)


Heathcoat-Amory, David
Moate, Roger


Heddle, John
Monro, Sir Hector


Heseltine, Rt Hon Michael
Montgomery, Sir Fergus


Hicks, Mrs Maureen (Wolv' NE)
Moore, Rt Hon John


Higgins, Rt Hon Terence L.
Morris, M (N'hampton S)


Hind, Kenneth
Morrison, Hon Sir Charles


Hogg, Hon Douglas (Gr'th'm)
Moss, Malcolm


Holt, Richard
Moynihan, Hon Colin


Hordern, Sir Peter
Neale, Gerrard


Howard, Michael
Needham, Richard


Howarth, Alan (Strat'd-on-A)
Nelson, Anthony


Howarth, G. (Cannock &amp; B'wd)
Neubert, Michael


Howell, Ralph (North Norfolk)
Newton, Rt Hon Tony


Hughes, Robert G. (Harrow W)
Nicholson, David (Taunton)



Hunt, David (Wirral W)
Nicholson, Emma (Devon West)


Hunt, John (Ravensbourne)
Onslow, Rt Hon Cranley


Hunter, Andrew
Oppenheim, Phillip


Hurd, Rt Hon Douglas
Page, Richard


Irvine, Michael
Paice, James


Irving, Charles
Parkinson, Rt Hon Cecil


Jack, Michael
Patnick, Irvine


Jackson, Robert
Patten, John (Oxford W)






Pattie, Rt Hon Sir Geoffrey
Stewart, Andy (Sherwood)


Pawsey, James
Stewart, Ian (Hertfordshire N)


Peacock, Mrs Elizabeth
Stokes, John


Porter, Barry (Wirral S)
Stradling Thomas, Sir John


Porter, David (Waveney)
Sumberg, David


Portillo, Michael
Tapsell, Sir Peter


Powell, William (Corby)
Taylor, Ian (Esher)


Price, Sir David
Taylor, John M (Solihull)


Raffan, Keith
Tebbit, Rt Hon Norman


Raison, Rt Hon Timothy
Temple-Morris, Peter


Rathbone, Tim
Thatcher, Rt Hon Margaret


Redwood, John
Thompson, D. (Calder Valley)


Renton, Tim
Thompson, Patrick (Norwich N)


Rhodes James, Robert
Thorne, Neil


Rhys Williams, Sir Brandon
Thornton, Malcolm


Riddick, Graham
Thurnham, Peter


Ridley, Rt Hon Nicholas
Townend, John (Bridlington)


Ridsdale, Sir Julian
Townsend, Cyril D. (B'heath)


Roberts, Wyn (Conwy)
Tracey, Richard


Roe, Mrs Marion
Tredinnick, David


Rossi, Sir Hugh
Trippier, David


Rost, Peter
Trotter, Neville


Rowe, Andrew
Twinn, Dr Ian


Rumbold, Mrs Angela
Vaughan, Sir Gerard


Ryder, Richard
Waddington, Rt Hon David


Sackville, Hon Tom
Wakeham, Rt Hon John


Sainsbury, Hon Tim
Waldegrave, Hon William


Sayeed, Jonathan
Walden, George


Scott, Nicholas
Walker, Bill (T'side North)


Shaw, David (Dover)
Walker, Rt Hon P. (W'cester)


Shaw, Sir Giles (Pudsey)
Waller, Gary


Shaw, Sir Michael (Scarb')
Walters, Dennis


Shelton, William (Streatham)
Ward, John


Shephard, Mrs G. (Norfolk SW)
Wardle, Charles (Bexhill)


Shepherd, Colin (Hereford)
Warren, Kenneth


Shepherd, Richard (Aldridge)
Watts, John


Shersby, Michael
Wheeler, John


Sims, Roger
Whitney, Ray


Skeet, Sir Trevor
Widdecombe, Ann


Smith, Tim (Beaconsfield)
Wilkinson, John


Soames, Hon Nicholas
Wilshire, David


Speed, Keith
Wolfson, Mark


Speller, Tony
Wood, Timothy


Spicer, Sir Jim (Dorset W)
Woodcock, Mike


Spicer, Michael (S Worcs)
Yeo, Tim


Squire, Robin
Young, Sir George (Acton)


Stanbrook, Ivor



Steen, Anthony
Tellers for the Ayes:


Stern, Michael
Mr. Robert Boscawen and


Stevens, Lewis
Mr. Tristan Garel-Jones.


Stewart, Allan (Eastwood)



NOES


Abbott, Ms Diane
Bruce, Malcolm (Gordon)


Adams, Allen (Paisley N)
Buchan, Norman


Allen, Graham
Caborn, Richard


Alton, David
Callaghan, Jim


Archer, Rt Hon Peter
Campbell, Menzies (Fife NE)


Armstrong, Hilary
Campbell, Ron (Blyth Valley)


Ashdown, Paddy
Campbell-Savours, D. N.


Ashley, Rt Hon Jack
Canavan, Dennis


Ashton, Joe
Carlile, Alex (Mont'g)


Banks, Tony (Newham NW)
Cartwright, John


Barnes, Harry (Derbyshire NE)
Clark, Dr David (S Shields)


Barnes, Mrs Rosie (Greenwich)
Clarke, Tom (Monklands W)


Barron, Kevin
Clay, Bob


Battle, John
Clelland, David


Beckett, Margaret
Clwyd, Mrs Ann


Beith, A. J.
Cohen, Harry


Bell, Stuart
Coleman, Donald


Benn, Rt Hon Tony
Cook, Frank (Stockton N)


Bennett, A. F. (D'nt'n &amp; R'dish)
Cook, Robin (Livingston)


Bermingham, Gerald
Corbyn, Jeremy


Bidwell, Sydney
Cousins, Jim


Blair, Tony
Cox, Tom


Boyes, Roland
Crowther, Stan


Bradley, Keith
Cryer, Bob


Bray, Dr Jeremy
Cummings, John


Brown, Gordon (D'mline E)
Cunliffe, Lawrence


Brown, Nicholas (Newcastle E)
Cunningham, Dr John





Dalyell, Tam
McAvoy, Thomas


Darling, Alistair
McCartney, Ian


Davies, Rt Hon Denzil (Llanelli)
Macdonald, Calum A.


Davies, Ron (Caerphilly)
McFall, John


Davis, Terry (B'ham Hodge H'I)
McGrady, Eddie


Dewar, Donald
McKay, Allen (Barnsley West)


Dixon, Don
McKelvey, William


Dobson, Frank
McLeish, Henry


Doran, Frank
McNamara, Kevin


Douglas, Dick
McTaggart, Bob


Duffy, A. E. P.
McWilliam, John


Dunnachie, Jimmy
Madden, Max


Dunwoody, Hon Mrs Gwyneth
Mahon, Mrs Alice


Eadie, Alexander
Marek, Dr John


Eastham, Ken
Marshall, David (Shettleston)


Evans, John (St Helens N)
Marshall, Jim (Leicester S)


Ewing, Harry (Falkirk E)
Martin, Michael J. (Springburn)


Ewing, Mrs Margaret (Moray)
Maxton, John


Fatchett, Derek
Meacher, Michael


Faulds, Andrew
Michie, Bill (Sheffield Heeley)


Fearn, Ronald
Michie, Mrs Ray (Arg'l &amp; Bute)


Field, Frank (Birkenhead)
Millan, Rt Hon Bruce


Fields, Terry (L'pool B G'n)
Mitchell, Austin (G't Grimsby)


Fisher, Mark
Moonie, Dr Lewis


Flannery, Martin
Morgan, Rhodri


Flynn, Paul
Morris, Rt Hon J. (Aberavon)


Foot, Rt Hon Michael
Mowlam, Marjorie


Foster, Derek
Mullin, Chris


Foulkes, George
Murphy, Paul


Fraser, John
Nellist, Dave


Galbraith, Sam
Oakes, Rt Hon Gordon


Galloway, George
O'Neill, Martin


Garrett, John (Norwich South)
Orme, Rt Hon Stanley


George, Bruce
Owen, Rt Hon Dr David


Gilbert, Rt Hon Dr John
Parry, Robert


Godman, Dr Norman A.
Patchett, Terry


Golding, Mrs Llin
Pendry, Tom


Gordon, Mildred
Pike, Peter L.


Gould, Bryan
Prescort, John


Grant, Bernie (Tottenham)
Primarolo, Dawn


Griffiths, Nigel (Edinburgh S)
Quin, Ms Joyce


Griffiths, Win (Bridgend)
Randall, Stuart


Grocott, Bruce
Redmond, Martin


Hattersley, Rt Hon Roy
Rees, Rt Hon Merlyn


Healey, Rt Hon Denis
Reid, Dr John


Heffer, Eric S.
Richardson, Jo


Henderson, Doug
Roberts, Allan (Bootle)


Hinchliffe, David
Robertson, George


Hogg, N. (C'nauld &amp; Kilsyth)
Robinson, Geoffrey


Holland, Stuart
Rogers, Allan


Home Robertson, John
Rooker, Jeff


Howarth, George (Knowsley N)
Ross, Ernie (Dundee W)


Howell, Rt Hon D. (S'heath)
Rowlands, Ted


Howells, Geraint
Ruddock, Joan


Hoyle, Doug
Sedgemore, Brian


Hughes, John (Coventry NE)
Sheerman, Barry


Hughes, Robert (Aberdeen N)
Sheldon, Rt Hon Robert


Hughes, Roy (Newport E)
Shore, Rt Hon Peter


Hughes, Sean (Knowsley S)
Short, Clare


Hughes, Simon (Southwark)
Skinner, Dennis


Hume, John
Smith, Andrew (Oxford E)


Illsley, Eric
Smith, C. (Isl'ton &amp; F'bury)


Ingram, Adam
Smith, Cyril (Rochdale)


Janner, Greville
Smith, Rt Hon J. (Monk'ds E)


John, Brynmor
Snape, Peter


Jones, Barry (Alyn &amp; Deeside)
Soley, Clive


Jones, Ieuan (Ynys Môn)
Steel, Rt Hon David


Kaufman, Rt Hon Gerald
Stott, Roger


Kennedy, Charles
Strang, Gavin


Kinnock, Rt Hon Neil
Straw, Jack


Kirkwood, Archy
Taylor, Mrs Ann (Dewsbury)


Leadbitter, Ted
Taylor, Matthew (Truro)


Leighton, Ron
Thomas, Dr Dafydd Elis


Lestor, Joan (Eccles)
Turner, Dennis


Lewis, Terry
Vaz, Keith


Livingstone, Ken
Wall, Pat


Livsey, Richard
Walley, Joan


Lloyd, Tony (Stretford)
Wardell, Gareth (Gower)


Lofthouse, Geoffrey
Wareing, Robert N.


McAllion, John
Welsh, Andrew (Angus E)






Welsh, Michael (Doncaster N)
Worthington, Tony


Wigley, Dafydd
Young, David (Bolton SE)


Williams, Rt Hon Alan



Williams, Alan W. (Carm'then)
Tellers for the Noes:


Wilson, Brian
Mr. Ray Powell and


Winnick, David
Mr. Frank Haynes.


Wise, Mrs Audrey

Question accordingly agreed to.

12. INCOME TAX (PERSONAL RELIEFS)

Resolved,
That—

(1) In section 257 of the Income and Corporation Taxes Act 1988 (personal reliefs)—

(a) in subsection (1)(a) (married allowance) for "£3,795" there shall be substituted "£4,095";
(b) in subsections (1)(b) (single allowance) and (6) (wife's earned income relief) for "£2,425" there shall be substituted "£2,605";
(c) in subsection (2)(a) (married allowance: age 65 to 79), for "£4,675" there shall be substituted "£5,035";
(d) in subsection (2)(b) (single allowance: age 65 to 79), for "£2,960" there shall be substituted "£3,180";
(e) in subsection (3)(a) (married allowance: age 80 and over), for "£4,845" there shall be substituted "£5,205";
(f) in subsection (3)(b) (single allowance: age 80 and over), for "£3,070" there shall be substituted "£3,310";
(g) in subsection (5) (income limit for age allowance), for "£9,800" there shall be substituted "£10,600".

(2) Section 257(9) of that Act (indexation) shall not apply for the year 1988–89.
(3) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 203 of that Act (pay as you earn) before 15th June 1988.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

13. CORPORATION TAX (CHARGE AND RATE FOR FINANCIAL YEAR 1988)

Resolved,
That corporation tax shall he charged for the financial year 1988 at the rate of 35 per cent.—[Mr. Lawson.]

14. CORPORATION TAX (SMALL COMPANIES)

Resolved,
That—

(a) the small companies rate for the financial year 1988 shall be 25 per cent.; and
(b) the fraction mentioned in section 13(2) of the Income and Corporation Taxes Act 1988, and in section 95(2) of the Finance Act 1972, shall be one fortieth.—[Mr. Lawson.]

15. INCOME TAX (MINOR PERSONAL ALLOWANCES)

Question put,
That—

(1) Sections 258, 263 and 264 of the Income and Corporation Taxes Act 1988 (housekeeper allowance, dependent relative allowance and son's or daughter's allowance) shall not have effect for the year 1988–89 or any subsequent year of assessment.
(2) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 203 of that Act (pay as you earn) before 15th June 1988.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

The House divided: Ayes 334, Noes 228.

Division No. 219]
[10.30 pm


AYES


Adley, Robert
Dorrell, Stephen


Aitken, Jonathan
Douglas-Hamilton, Lord James


Alexander, Richard
Dover, Den


Alison, Rt Hon Michael
Dunn, Bob


Allason, Rupert
Durant, Tony


Amess, David
Eggar, Tim


Amos, Alan
Emery, Sir Peter


Arbuthnot, James
Evans, David (Welwyn Hatf'd)


Arnold, Jacques (Gravesham)
Evennett, David


Arnold, Tom (Hazel Grove)
Fairbairn, Nicholas


Ashby, David
Fallon, Michael


Aspinwall, Jack
Farr, Sir John


Atkins, Robert
Favell, Tony


Baker, Rt Hon K. (Mole Valley)
Fenner, Dame Peggy


Baker, Nicholas (Dorset N)
Field, Barry (Isle of Wight)


Baldry, Tony
Fookes, Miss Janet


Banks, Robert (Harrogate)
Forman, Nigel


Batiste, Spencer
Forsyth, Michael (Stirling)


Beaumont-Dark, Anthony
Forth, Eric


Bellingham, Henry
Fowler, Rt Hon Norman


Bendall, Vivian
Franks, Cecil


Bennett, Nicholas (Pembroke)
Freeman, Roger


Benyon, W.
French, Douglas


Bevan, David Gilroy
Fry, Peter


Biffen, Rt Hon John
Gale, Roger


Biggs-Davison, Sir John
Gardiner, George


Blackburn, Dr John G.
Gill, Christopher


Blaker, Rt Hon Sir Peter
Gilmour, Rt Hon Sir Ian


Bonsor, Sir Nicholas
Glyn, Dr Alan


Bottomley, Peter
Goodhart, Sir Philip


Bottomley, Mrs Virginia
Goodlad, Alastair


Bowden, A (Brighton K'pto'n)
Goodson-Wickes, Dr Charles


Bowden, Gerald (Dulwich)
Gorman, Mrs Teresa


Bowis, John
Gorst, John


Boyson, Rt Hon Dr Sir Rhodes
Gow, Ian


Braine, Rt Hon Sir Bernard
Gower, Sir Raymond


Brandon-Bravo, Martin
Grant, Sir Anthony (CambsSW)


Brazier, Julian
Greenway, Harry (Ealing N)


Bright, Graham
Greenway, John (Ryedale)


Brittan, Rt Hon Leon
Gregory, Conal


Brooke, Rt Hon Peter
Griffiths, Sir Eldon (Bury St E')


Brown, Michael (Brigg &amp; Cl't's)
Griffiths, Peter (Portsmouth N)


Browne, John (Winchester)
Grist, Ian


Buchanan-Smith, Rt Hon Alick
Ground, Patrick


Buck, Sir Antony
Grylls, Michael


Budgen, Nicholas
Hamilton, Hon Archie (Epsom)


Burns, Simon
Hamilton, Neil (Tatton)


Burt, Alistair
Hampson, Dr Keith


Butcher, John
Hanley, Jeremy


Butler, Chris
Hannam, John


Butterfill, John
Hargreaves, A. (B'ham H'll Gr')


Carlisle, John, (Luton N)
Hargreaves, Ken (Hyndburn)


Carlisle, Kenneth (Lincoln)
Harris, David


Carrington, Matthew
Hawkins, Christopher


Carttiss, Michael
Hayes, Jerry


Cash, William
Hayhoe, Rt Hon Sir Barney


Channon, Rt Hon Paul
Hayward, Robert


Chapman, Sydney
Heath, Rt Hon Edward


Chope, Christopher
Heathcoat-Amory, David


Churchill, Mr
Heddle, John


Clark, Hon Alan (Plym'th S'n)
Heseltine, Rt Hon Michael


Clark, Dr Michael (Rochford)
Hicks, Mrs Maureen (Wolv' NE)


Clark, Sir W. (Croydon S)
Higgins, Rt Hon Terence L.


Clarke, Rt Hon K. (Rushcliffe)
Hind, Kenneth


Colvin, Michael
Hogg, Hon Douglas (Gr'th'm)


Conway, Derek
Holt, Richard


Coombs, Anthony (Wyre F'rest)
Hordern, Sir Peter


Coombs, Simon (Swindon)
Howard, Michael


Cope, John
Howarth, Alan (Strat'd-on-A)


Cormack, Patrick
Howarth, G. (Cannock &amp; B'wd)


Cran, James
Howell, Ralph (North Norfolk)


Critchley, Julian
Hughes, Robert G. (Harrow W)


Currie, Mrs Edwina
Hunt, David (Wirral W)


Davies, Q. (Stamf'd &amp; Spald'g)
Hunt, John (Ravensbourne)


Davis, David (Boothferry)
Hunter, Andrew


Day, Stephen
Hurd, Rt Hon Douglas


Devlin, Tim
Irvine, Michael


Dickens, Geoffrey
Irving, Charles






Jack, Michael
Patnick, Irvine


Jackson, Robert
Patten, John (Oxford W)


Janman, Tim
Pattie, Rt Hon Sir Geoffrey


Jessel, Toby
Pawsey, James


Johnson Smith, Sir Geoffrey
Peacock, Mrs Elizabeth


Jones, Gwilym (Cardiff N)
Porter, Barry (Wirral S)


Jones, Robert B (Herts W)
Porter, David (Waveney)


Jopling, Rt Hon Michael
Portillo, Michael


Kellett-Bowman, Dame Elaine
Powell, William (Corby)


King, Roger (B'ham N'thfield)
Price, Sir David


Kirkhope, Timothy
Raffan, Keith


Knapman, Roger
Raison, Rt Hon Timothy


Knight, Greg (Derby North)
Rathbone, Tim


Knight, Dame Jill (Edgbaston)
Redwood, John


Knowles, Michael
Renton, Tim


Knox, David
Rhodes James, Robert


Lamont, Rt Hon Norman
Rhys Williams, Sir Brandon


Lang, Ian
Riddick, Graham


Latham, Michael
Ridley, Rt Hon Nicholas


Lawrence, Ivan
Ridsdale, Sir Julian


Lawson, Rt Hon Nigel
Roberts, Wyn (Conwy)


Lee, John (Pendle)
Roe, Mrs Marion


Leigh, Edward (Gainsbor'gh)
Rossi, Sir Hugh


Lennox-Boyd, Hon Mark
Rost, Peter


Lester, Jim (Broxtowe)
Rowe, Andrew


Lightbown, David
Rumbold, Mrs Angela


Lilley, Peter
Ryder, Richard


Lloyd, Sir Ian (Havant)
Sackville, Hon Tom


Lloyd, Peter (Fareham)
Sainsbury, Hon Tim


Lord, Michael
Sayeed, Jonathan


Luce, Rt Hon Richard
Scott, Nicholas


Lyell, Sir Nicholas
Shaw, David (Dover)


McCrindle, Robert
Shaw, Sir Giles (Pudsey)


Macfarlane, Sir Neil
Shaw, Sir Michael (Scarb')


MacGregor, Rt Hon John
Shelton, William (Streatham)


MacKay, Andrew (E Berkshire)
Shephard, Mrs G. (Norfolk SW)


Maclean, David
Shepherd, Colin (Hereford)


McLoughlin, Patrick
Shepherd, Richard (Aldridge)


McNair-Wilson, M. (Newbury)
Shersby, Michael


McNair-Wilson, P. (New Forest)
Sims, Roger


Madel, David
Skeet, Sir Trevor


Major, Rt Hon John
Smith, Tim (Beaconsfield)


Malins, Humfrey
Soames, Hon Nicholas


Mans, Keith
Speed, Keith


Maples, John
Speller, Tony


Marland, Paul
Spicer, Sir Jim (Dorset W)


Marshall, John (Hendon S)
Spicer, Michael (S Worcs)


Marshall, Michael (Arundel)
Squire, Robin


Martin, David (Portsmouth S)
Stanbrook, Ivor


Mates, Michael
Steen, Anthony


Maude, Hon Francis
Stern, Michael


Maxwell-Hyslop, Robin
Stevens, Lewis


Mayhew, Rt Hon Sir Patrick
Stewart, Allan (Eastwood)


Mellor, David
Stewart, Andy (Sherwood)


Meyer, Sir Anthony
Stewart, Ian (Hertfordshire N)


Miller, Hal
Stokes, John


Mills, Iain
Stradling Thomas, Sir John


Miscampbell, Norman
Sumberg, David


Mitchell, Andrew (Gedling)
Tapsell, Sir Peter


Mitchell, David (Hants NW)
Taylor, Ian (Esher)


Moate, Roger
Taylor, John M (Solihull)


Monro, Sir Hector
Tebbit, Rt Hon Norman


Montgomery, Sir Fergus
Temple-Morris, Peter


Moore, Rt Hon John
Thatcher, Rt Hon Margaret


Morris, M (N'hampton S)
Thompson, D. (Calder Valley)


Morrison, Hon Sir Charles
Thompson, Patrick (Norwich N)


Moss, Malcolm
Thorne, Neil


Moynihan, Hon Colin
Thornton, Malcolm


Neale, Gerrard
Thurnham, Peter


Needham, Richard
Townend, John (Bridlington)


Nelson, Anthony
Townsend, Cyril D. (B'heath)


Neubert, Michael
Tracey, Richard


Newton, Rt Hon Tony
Tredinnick, David


Nicholson, David (Taunton)
Trippier, David


Nicholson, Emma (Devon West)
Trotter, Neville


Onslow, Rt Hon Cranley
Twinn, Dr Ian


Oppenheim, Phillip
Vaughan, Sir Gerard


Page, Richard
Waddington, Rt Hon David


Paice, James
Wakeham, Rt Hon John


Parkinson, Rt Hon Cecil
Waldegrave, Hon William





Walden, George
Wilkinson, John


Walker, Bill (T'side North)
Wilshire, David


Waller, Gary
Wolfson, Mark


Walters, Dennis
Wood, Timothy


Ward, John
Woodcock, Mike


Wardle, Charles (Bexhill)
Yeo, Tim


Warren, Kenneth
Young, Sir George (Acton)


Watts, John



Wheeler, John
Tellers for the Ayes:


Whitney, Ray
Mr. Robert Boscawen and


Widdecombe, Ann
Mr. Tristan Garel-Jones.


NOES


Abbott, Ms Diane
Eastham, Ken


Adams, Allen (Paisley N)
Evans, John (St Helens N)


Allen, Graham
Ewing, Harry (Falkirk E)


Alton, David
Ewing, Mrs Margaret (Moray)


Archer, Rt Hon Peter
Fatchett, Derek


Armstrong, Hilary
Faulds, Andrew


Ashdown, Paddy
Fearn, Ronald


Ashley, Rt Hon Jack
Field, Frank (Birkenhead)


Ashton, Joe
Fields, Terry (L'pool B G'n)


Banks, Tony (Newham NW)
Fisher, Mark


Barnes, Harry (Derbyshire NE)
Flannery, Martin


Barron, Kevin
Flynn, Paul


Battle, John
Foot, Rt Hon Michael


Beckett, Margaret
Forsythe, Clifford (Antrim S)


Beggs, Roy
Foster, Derek


Beith, A. J.
Foulkes, George


Bell, Stuart
Fraser, John


Benn, Rt Hon Tony
Galbraith, Sam


Bennett, A. F. (D'nt'n &amp; R'dish)
Galloway, George


Bermingham, Gerald
Garrett, John (Norwich South)


Bidwell, Sydney
George, Bruce


Blair, Tony
Gilbert, Rt Hon Dr John


Boyes, Roland
Godman, Dr Norman A.


Bradley, Keith
Golding, Mrs Llin


Bray, Dr Jeremy
Gordon, Mildred


Brown, Gordon (D'mline E)
Gould, Bryan


Brown, Nicholas (Newcastle E)
Grant, Bernie (Tottenham)


Bruce, Malcolm (Gordon)
Griffiths, Nigel (Edinburgh S)


Buchan, Norman
Griffiths, Win (Bridgend)


Caborn, Richard
Grocott, Bruce


Callaghan, Jim
Hattersley, Rt Hon Roy


Campbell, Menzies (Fife NE)
Healey, Rt Hon Denis


Campbell, Ron (Blyth Valley)
Heffer, Eric S.


Campbell-Savours, D. N.
Henderson, Doug


Canavan, Dennis
Hinchliffe, David


Carlile, Alex (Mont'g)
Hogg, N. (C'nauld &amp; Kilsyth)


Clark, Dr David (S Shields)
Holland, Stuart


Clarke, Tom (Monklands W)
Home Robertson, John


Clay, Bob
Howarth, George (Knowsley N)


Clelland, David
Howell, Rt Hon D. (S'heath)


Clwyd, Mrs Ann
Howells, Geraint


Cohen, Harry
Hoyle, Doug


Coleman, Donald
Hughes, John (Coventry NE)


Cook, Frank (Stockton N)
Hughes, Robert (Aberdeen N)


Cook, Robin (Livingston)
Hughes, Roy (Newport E)


Corbyn, Jeremy
Hughes, Sean (Knowsley S)


Cousins, Jim
Hughes, Simon (Southwark)


Cox, Tom
Hume, John


Crowther, Stan
Illsley, Eric


Cryer, Bob
Ingram, Adam


Cummings, John
Janner, Greville


Cunliffe, Lawrence
John, Brynmor


Cunningham, Dr John
Jones, Barry (Alyn &amp; Deeside)


Dalyell, Tam
Jones, Ieuan (Ynys Môn)


Darling, Alistair
Kaufman, Rt Hon Gerald


Davies, Rt Hon Denzil (Llanelli)
Kennedy, Charles


Davies, Ron (Caerphilly)
Kilfedder, James


Davis, Terry (B'ham Hodge H'I)
Kinnock, Rt Hon Neil


Dewar, Donald
Kirkwood, Archy


Dixon, Don
Leadbitter, Ted


Dobson, Frank
Leighton, Ron


Doran, Frank
Lestor, Joan (Eccles)


Douglas, Dick
Lewis, Terry


Duffy, A. E. P.
Livingstone, Ken


Dunnachie, Jimmy
Livsey, Richard


Dunwoody, Hon Mrs Gwyneth
Lloyd, Tony (Stretford)


Eadie, Alexander
Lofthouse, Geoffrey






McAllion, John
Robertson, George


McAvoy, Thomas
Robinson, Geoffrey


McCartney, Ian
Rogers, Allan


Macdonald, Calum A.
Rooker, Jeff


McFall, John
Ross, Ernie (Dundee W)


McGrady, Eddie
Ross, William (Londonderry E)


McKay, Allen (Barnsley West)
Rowlands, Ted


McKelvey, William
Ruddock, Joan


McLeish, Henry
Sedgemore, Brian


McNamara, Kevin
Sheerman, Barry


McTaggart, Bob
Sheldon, Rt Hon Robert


McWilliam, John
Shore, Rt Hon Peter


Madden, Max
Short, Clare


Maginnis, Ken
Skinner, Dennis


Mahon, Mrs Alice
Smith, Andrew (Oxford E)


Marek, Dr John
Smith, C. (Isl'ton &amp; F'bury)


Marshall, David (Shettleston)
Smith, Cyril (Rochdale)


Marshall, Jim (Leicester S)
Smith, Rt Hon J. (Monk'ds E)


Martin, Michael J. (Springburn)
Smyth, Rev Martin (Belfast S)


Maxton, John
Snape, Peter


Meacher, Michael
Soley, Clive


Michie, Bill (Sheffield Heeley)
Steel, Rt Hon David


Michie, Mrs Ray (Arg'l &amp; Bute)
Stott, Roger


Millan, Rt Hon Bruce
Strang, Gavin


Mitchell, Austin (G't Grimsby)
Straw, Jack


Molyneaux, Rt Hon James
Taylor, Mrs Ann (Dewsbury)


Moonie, Dr Lewis
Taylor, Matthew (Truro)


Morgan, Rhodri
Thomas, Dr Dafydd Elis


Morris, Rt Hon J. (Aberavon)
Turner, Dennis


Mowlam, Marjorie
Vaz, Keith


Mullin, Chris
Walker, A. Cecil (Belfast N)


Murphy, Paul
Wall, Pat


Nellist, Dave
Walley, Joan


Oakes, Rt Hon Gordon
Wardell, Gareth (Gower)


O'Neill, Martin
Wareing, Robert N.


Orme, Rt Hon Stanley
Welsh, Andrew (Angus E)


Parry, Robert
Welsh, Michael (Doncaster N)


Patchett, Terry
Wigley, Dafydd


Pendry, Tom
Williams, Rt Hon Alan


Pike, Peter L.
Williams, Alan W. (Carm'then)


Prescott, John
Wilson, Brian


Primarolo, Dawn
Winnick, David


Quin, Ms Joyce
Wise, Mrs Audrey


Randall, Stuart
Worthington, Tony


Redmond, Martin
Young, David (Bolton SE)


Rees, Rt Hon Merlyn



Reid, Dr John
Tellers for the Noes:


Richardson, Jo
Mr. Ray Powell and


Roberts, Allan (Bootle)
Mr. Frank Haynes.

Question accordingly agreed to.

16. COVENANTS AND MAINTENANCE, ETC.

Resolved,
That—
(1) The following sections shall be inserted at the beginning of Part IX of the Income and Corporation Taxes Act 1988—

"General rule

347A.—(1) A payment to which this section applies shall not be a charge on the income of the person liable to make it, and accordingly—

(a) his income shall he computed without any deduction being made on account of the payment, and
(b) the payment shall not form part of the income of the person to whom it is made or of any other person.

(2) This section applies to any annual payment made by an individual which would otherwise be within the charge to tax under Case III of Schedule D except—

(a) a payment of interest;
(b) a covenanted payment to charity (within the meaning given by section 660(3));
(c) a payment made for bona fide commercial reasons in connection with the individual's trade, profession or vocation; and
(d) a payment to which section 125(1) applies.

(3) This section applies to a payment made by personal representatives (within the meaning given in section 701(4)) where—

(a) the deceased would have been liable to make the payment if he had not died, and
(b) this section would have applied to the payment if he had made it.

(4) A maintenance payment arising outside the United Kingdom shall not be within the charge to tax under Case V of Schedule D if, because of this section, it would not have been within the charge to tax under Case III if it had arisen in the United Kingdom; and for this purpose "maintenance payment" means a periodical payment (not being an instalment of a lump sum) which satisfies the conditions set out in paragraphs (a) and (b) of section 347B(5).

(5) No deduction shall be made under section 65(1)(b) on account of an annuity or other annual payment which would not have been within the charge to tax under Case III of Schedule D if it had arisen in the United Kingdom.

Qualifying maintenance payments

347B. — (1) In this section "qualifying maintenance payment" means a periodical payment which—

(a) is made under an order by a court in the United Kingdom, or under a written agreement the proper law of which is the law of a part of the United Kingdom,
(b) is made by one of the parties to a marriage (including a marriage which has been dissolved or annulled) either—

(i) to or for the benefit of the other party and for the maintenance of the other party, or
(ii) to the other party for the maintenance by the other party of any child of the family,

(c) is due at a time when—

(i) the two parties are not a married couple living together, and
(ii) the party to whom or for whose benefit the payment is made has not remarried, and

(d) is not a payment in respect of which relief from tax is available to the person making the payment under any provision of the Income Tax Acts other than this section.

(2) Notwithstanding section 347A(1)(a) but subject to subsections (3) and (4) below, a person making a claim for the purpose shall be entitled, in computing his total income for a year of assessment, to deduct an amount equal to the aggregate amount of any qualifying maintenance payments made by him which fall due in that year.

(3) The amount which may be deducted under this section by a person in computing his total income for a year of assessment shall not exceed the amount of the difference between the higher (married person's) relief and the lower (single person's) relief under subsection (1) of section 257 as it applies for the year to a person not falling within subsection (2) or (3) of that section.

(4) Where qualifying maintenance payments falling due in a year of assessment are made by a person who also makes other maintenance payments attracting relief for that year, subsection (3) above shall apply as if the limit imposed by it were reduced by an amount equal to the aggregate amount of those other payments.

(5) The reference in subsection (4) above to other maintenance payments attracting relief for a year is a reference to periodical payments which—

(a) are made under an order made by a court (whether in the United Kingdom or elsewhere) or under a written or oral agreement, and
(b) are made by a person—

(i) as one of the parties to a marriage (including a marriage which has been dissolved or annulled) to or for the benefit of the other party to the marriage and for the maintenance of the other party, or
(ii) to any person under 21 years of age for his own benefit, maintenance or education, or
(iii) to any person for the benefit, maintenance or education of a person under 21 years of age,


and in respect of which the person making them is entitled otherwise than under this section to make a deduction in computing his income for the year.

(6) The reference in subsection (1) above to a married couple living together shall be construed in accordance with section 282(1), but section 282(2) shall not apply for the purposes of this section.

(7) In this section—

(a) "child of the family", in relation to the parties to a marriage, means a person under 21 years of age—

(i) who is a child of both those parties, or
(ii) who (not being a person who has been boarded out with them by a public authority or voluntary organisation) has been treated by both of them as a child of their family; and

(b) "periodical payment" does not include an instalment of a lump sum."

(2) The following sections shall be inserted at the beginning of Part II of the Income and Corporation Taxes Act 1970—

"General rule.

51(A). —(1) A payment to which this section applies shall not be a charge on the income of the person liable to make it, and accordingly—

(a) his income shall be computed without any deduction being made on account of the payment, and
(b) the payment shall not form part of the income of the person to whom it is made or of any other person.

(2) This section applies to any annual payment made by an individual which would otherwise be within the charge to tax under Case III of Schedule D except—

(a) a payment of interest;
(b) a covenanted payment to charity (within the meaning given by section 434(2) below);
(c) a payment made for bona fide commercial reasons in connection with the individual's trade, profession or vocation; and
(d) a payment to which section 48(1) of the Finance Act 1977 applies.

(3) This section applies to a payment made by personal representatives (within the meaning given in section 432(4) below) where—

(a) the deceased would have been liable to make the payment if he had not died, and
(b) this section would have applied to the payment if he had made it.

(4) A maintenance payment arising outside the United Kingdom shall not be within the charge to tax under Case V of Schedule D if, because of this section, it would not have been within the charge to tax under Case III if it had arisen in the United Kingdom; and for this purpose "maintenance payment" means a periodical payment (not being an instalment of a lump sum) which satisfies the conditions set out in paragraphs (a) and (b) of section 51 B(5) below.

(5) No deduction shall be made under section 122(1)(b) below on account of an annuity or other annual payment which would not have been within the charge to tax under Case III of Schedule D if it had arisen in the United Kingdom.

Qualifying maintenance payments

51B. — (1) In this section "qualifying maintenance payment" means a periodical payment which—

(a) is made under an order made by a court in the United Kingdom, or under a written agreement the proper law of which is the law of a part of the United Kingdom,
(b) is made by one of the parties to a marriage (including a marriage which has been dissolved or annulled) either—

(i) to or for the benefit of the other party and for the maintenance of the other party, or
(ii) to the other party for the maintenance by the other party of any child of the family,

(c) is due at at time when—

(i) the two parties are not a married couple living together, and
(ii) the party to whom or for whose benefit the payment is made has not remarried, and


(d) is not a payment in respect of which relief from tax is available to the person making the payment under any provision of the Income Tax Acts other than this section.

(2) Notwithstanding section 51A(1)(a) above but subject to subsections (3) and (4) below, a person making a claim for the purpose shall be entitled, in computing his total income for the year 1987–88, to deduct an amount equal to the aggregate amount of any qualifying maintenance payments made by him which fall due in that year.

(3) The amount which may be deducted under this section by a person in computing his total income for the year 1987–88 shall not exceed £1,370.

(4) Where qualifying maintenance payments falling due in the year 1987–88 are made by a person who also makes other maintenance payments attracting relief for that year, subsection (3) above shall apply as if the limit imposed by it were reduced by an amount equal to the aggregate amount of those other payments.

(5) The reference in subsection (4) above to other maintenance payments attracting relief for the year 1987–88 is a reference to periodical payments which—

(a) are made under an order made by a court (whether in the United Kingdom or elsewhere) or under a written or oral agreement, and
(b) are made by a person—

(i) as one of the parties to a marriage (including a marriage which has been disolved or annulled) to or for the benefit of the other party to the marriage and for the maintenance of the other party, or
(ii) to any person under 21 years of age for his own benefit, maintenance or education, or
(iii) to any person for the benefit, maintenance or education of a person under 21 years of age,

and in respect of which the person making them is entitled otherwise than under this section to make a deduction in computing his income for the year.

(6) The reference in subsection (1) above to a married couple living together shall be construed in accordance with section 42(1) above, but section 42(2) above shall not apply for the purposes of this section.

(7) In this section—

(a) "child of the family", in relation to the parties to a marriage, means a person under 21 years of age—

(i) who is a child of both those parties, or
(ii) who (not being a person who has been hoarded out with them by a public authority or voluntary organisation) has been treated by both of them as a child of their family, and

(b) "periodical payment" does not include an instalment of a lump sum."

(3) This Resolution shall have effect in relation to any payment falling due on or after 15th March 1988 unless it is made in pursuance of an existing obligation.

(4) In paragraph (3) above "existing obligation" means a binding obligation—

(a) under an order made by a court (whether in the United Kingdom or elsewhere) before 15th March 1988, or before the end of June 1988 on an application made on or before 15th March 1988;
(b) under a deed executed or written agreement made before 15th March 1988 and received by an inspector before the end of June 1988;
(c) under an oral agreement made before 15th March 1988, written particulars of which have been received by an inspector before the end of June 1988; or
(d) under an order made by a court (whether in the United Kingdom or elsewhere) on or after 15th March 1988, or under a written agreement made on or after that date, where the order or agreement replaces, varies or supplements an order or agreement within this subsection;

but subject to paragraph (5) below.

(5) An obligation within paragraph (4)(d) above is an existing obligation only if—

(a) it is an obligation to make periodical payments (not being instalments of a lump sum) which arc made by a person—



(i) as one of the parties to a marriage (including a marriage which has been dissolved or annulled) to or for the benefit of the other party to the marriage and for the maintenance of the other party, or
(ii) to any person under 21 years of age for his own benefit, maintenance or education, or
(iii) to any person for the benefit, maintenance or education of a person under 21 years of age, and

(b) the order or agreement replaced, varied or supplemented provided for such payments to be made for the benefit, maintenance or, as the case may be, education of the same person.

(6) Section 351 of the Income and Corporation Taxes Act 1988 and section 65 of the Income and Corporation Taxes Act 1970 shall not apply to any payment in relation to which this Resolution has effect.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

17. RELIEF FOR INTEREST (LIMIT FOR 1988–89)

Resolved,
That, for the year 1988–89, the qualifying maximum referred to in sections 357 and 365(3) of the Income and Corporation Taxes Act 1988 (limit on relief for interest on certain loans) shall be £30,000.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1986.—[Mr. Lawson.]

18. RELIEF FOR INTEREST (HOME LOANS)

Resolved,
That provision may be made about relief for interest paid in relation to any land, caravan or house-boat used or to be used as an only or main residence.—[Mr. Lawson.]

19. RELIEF FOR INTEREST (HOME IMPROVEMENTS)

Question put,
That—

(1) In relation to payments of interest made on or after 6th April 1988 section 355 of the Income and Corporation Taxes Act 1988 (limitations on relief for loans for purchase or improvement of land etc.) shall have effect with the insertion of the following subsections after subsection (2)—
(2A) Section 354 shall not apply by virtue of subsection (1)(a) above where the interest is paid on a home improvement loan unless the loan was made before 6th April 1988.
(2B) In subsection (2A) above "home improvement loan" means—

(a) a loan to defray money applied in improving or developing land or buildings on land, otherwise than by the erection of a new building (which is not part of an existing residence) on land which immediately before the improvement or development began had no building on it, or
(b) a loan replacing (whether directly or indirectly) a loan within paragraph (a) above.

(2C) Where it is proved by written evidence that a loan made on or after 6th April 1988 was made in pursuance of an offer made by the lender before that date and that the offer either was in writing or was evidenced by a note or memorandum made by the lender before that date, the loan shall be deemed for the purposes of subsection (2A) above to have been made before that date.

(2) In relation to payments of interest made on or after 6th April 1988 section 356 of that Act (job-related accommodation) shall have effect with the insertion of the following subsection after subsection (1)—
(1A) Subsection (1) above shall not apply where the interest is paid on a home improvement loan (as defined in section 355 (2B)) unless the loan was made before 6th April 1988; and section 355 (2C) shall have effect for the purposes of this subsection as for those of section 355 (2A).

(3) Interest paid by a housing association on a home improvement loan made on or after 6th April 1988 shall not be relevant loan interest for the purposes of Part IX of that Act; and for the purposes of this paragraph—

(a) "housing association" means a housing association for the time being approved for the purposes of section 488 of that Act or a self-build society for the time being approved for the purposes of section 489,
(b) "home improvement loan" has the same meaning as in subsection (2B) of section 355 of that Act, and
(c) subsection (2C) of that section shall have effect as it does for the purposes of subsection (2A) of that section.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

The House divided: Ayes 335, Noes 218.

Division No. 220]
[10.42 pm


AYES


Adley, Robert
Baker, Rt Hon K. (Mole Valley)


Aitken, Jonathan
Baker, Nicholas (Dorset N)


Alexander, Richard
Baldry, Tony


Alison, Rt Hon Michael
Banks, Robert (Harrogate)


Allason, Rupert
Batiste, Spencer


Amess, David
Beaumont-Dark, Anthony


Amos, Alan
Bellingham, Henry


Arbuthnot, James
Bendall, Vivian


Arnold, Jacques (Gravesham)
Bennett, Nicholas (Pembroke)


Arnold, Tom (Hazel Grove)
Benyon, W.


Ashby, David
Bevan, David Gilroy


Aspinwall, Jack
Biffen, Rt Hon John


Atkins, Robert
Biggs-Davison, Sir John





Blackburn, Dr John G.
Glyn, Dr Alan


Blaker, Rt Hon Sir Peter
Goodhart, Sir Philip


Bonsor, Sir Nicholas
Goodlad, Alastair


Bottomley, Peter
Goodson-Wickes, Dr Charles


Bottomley, Mrs Virginia
Gorman, Mrs Teresa


Bowden, A (Brighton K'pto'n)
Gorst, John


Bowden, Gerald (Dulwich)
Gow, Ian


Bowis, John
Gower, Sir Raymond


Boyson, Rt Hon Dr Sir Rhodes
Grant, Sir Anthony (CambsSW)


Braine, Rt Hon Sir Bernard
Greenway, Harry (Ealing N)


Brandon-Bravo, Martin
Greenway, John (Ryedale)


Brazier, Julian
Gregory, Conal


Bright, Graham
Griffiths, Sir Eldon (Bury St E')


Brittan, Rt Hon Leon
Griffiths, Peter (Portsmouth N)


Brooke, Rt Hon Peter
Grist, Ian


Brown, Michael (Brigg &amp; Cl't's)
Ground, Patrick


Browne, John (Winchester)
Grylls, Michael


Buchanan-Smith, Rt Hon Alick
Hamilton, Hon Archie (Epsom)


Buck, Sir Antony
Hamilton, Neil (Tatton)


Budgen, Nicholas
Hampson, Dr Keith


Burns, Simon
Hanley, Jeremy


Burt, Alistair
Hannam, John


Butcher, John
Hargreaves, A. (B'ham H'll Gr')


Butler, Chris
Hargreaves, Ken (Hyndburn)


Butterfill, John
Harris, David


Carlisle, John, (Luton N)
Hawkins, Christopher


Carlisle, Kenneth (Lincoln)
Hayes, Jerry


Carrington, Matthew
Hayhoe, Rt Hon Sir Barney


Carttiss, Michael
Hayward, Robert


Cash, William
Heath, Rt Hon Edward


Channon, Rt Hon Paul
Heathcoat-Amory, David


Chapman, Sydney
Heddle, John


Chope, Christopher
Heseltine, Rt Hon Michael


Churchill, Mr
Hicks, Mrs Maureen (Wolv' NE)


Clark, Hon Alan (Plym'th S'n)
Higgins, Rt Hon Terence L.


Clark, Dr Michael (Rochford)
Hind, Kenneth


Clark, Sir W. (Croydon S)
Hogg, Hon Douglas (Gr'th'm)


Clarke, Rt Hon K. (Rushcliffe)
Holt, Richard


Colvin, Michael
Hordern, Sir Peter


Conway, Derek
Howard, Michael


Coombs, Anthony (Wyre F'rest)
Howarth, Alan (Strat'd-on-A)


Coombs, Simon (Swindon)
Howarth, G. (Cannock &amp; B'wd)


Cormack, Patrick
Howell, Ralph (North Norfolk)


Cran, James
Hughes, Robert G. (Harrow W)


Critchley, Julian
Hunt, David (Wirral W)


Currie, Mrs Edwina
Hunt, John (Ravensbourne)


Davies, Q. (Stamf'd &amp; Spald'g)
Hunter, Andrew


Davis, David (Boothferry)
Hurd, Rt Hon Douglas


Day, Stephen
Irvine, Michael


Devlin, Tim
Irving, Charles


Dickens, Geoffrey
Jack, Michael


Dorrell, Stephen
Jackson, Robert


Douglas-Hamilton, Lord James
Janman, Tim


Dover, Den
Jessel, Toby


Dunn, Bob
Johnson Smith, Sir Geoffrey


Durant, Tony
Jones, Gwilym (Cardiff N)


Eggar, Tim
Jones, Robert B (Herts W)


Emery, Sir Peter
Jopling, Rt Hon Michael


Evans, David (Welwyn Hatf'd)
Kellett-Bowman, Dame Elaine


Evennett, David
Kilfedder, James


Fairbairn, Nicholas
King, Roger (B'ham N'thfield)


Fallon, Michael
Kirkhope, Timothy


Farr, Sir John
Knapman, Roger


Favell, Tony
Knight, Greg (Derby North)


Fenner, Dame Peggy
Knight, Dame Jill (Edgbaston)


Field, Barry (Isle of Wight)
Knowles, Michael


Fookes, Miss Janet
Knox, David


Forman, Nigel
Lamont, Rt Hon Norman


Forsyth, Michael (Stirling)
Lang, Ian


Forth, Eric
Latham, Michael


Fowler, Rt Hon Norman
Lawrence, Ivan


Franks, Cecil
Lawson, Rt Hon Nigel


Freeman, Roger
Lee, John (Pendle)


French, Douglas
Leigh, Edward (Gainsbor'gh)


Fry, Peter
Lester, Jim (Broxtowe)


Gale, Roger
Lightbown, David


Gardiner, George
Lilley, Peter


Garel-Jones, Tristan
Lloyd, Sir Ian (Havant)


Gill, Christopher
Lord, Michael


Gilmour, Rt Hon Sir Ian
Luce, Rt Hon Richard






Lyell, Sir Nicholas
Sackville, Hon Tom


McCrindle, Robert
Sainsbury, Hon Tim


Macfarlane, Sir Neil
Sayeed, Jonathan


MacGregor, Rt Hon John
Scott, Nicholas


MacKay, Andrew (E Berkshire)
Shaw, David (Dover)


McLoughlin, Patrick
Shaw, Sir Giles (Pudsey)


McNair-Wilson, M. (Newbury)
Shaw, Sir Michael (Scarb')


McNair-Wilson, P. (New Forest)
Shelton, William (Streatham)


Madel, David
Shephard, Mrs G. (Norfolk SW)


Major, Rt Hon John
Shepherd, Colin (Hereford)


Malins, Humfrey
Shepherd, Richard (Aldridge)


Mans, Keith
Shersby, Michael


Maples, John
Sims, Roger


Marland, Paul
Skeet, Sir Trevor


Marshall, John (Hendon S)
Smith, Tim (Beaconsfield)


Marshall, Michael (Arundel)
Soames, Hon Nicholas


Martin, David (Portsmouth S)
Speed, Keith


Mates, Michael
Speller, Tony


Maude, Hon Francis
Spicer, Sir Jim (Dorset W)


Maxwell-Hyslop, Robin
Spicer, Michael (S Worcs)


Mayhew, Rt Hon Sir Patrick
Squire, Robin


Mellor, David
Stanbrook, Ivor


Meyer, Sir Anthony
Steen, Anthony


Miller, Hal
Stern, Michael


Mills, Iain
Stevens, Lewis


Miscampbell, Norman
Stewart, Allan (Eastwood)


Mitchell, Andrew (Gedling)
Stewart, Andy (Sherwood)


Mitchell, David (Hants NW)
Stewart, Ian (Hertfordshire N)


Moate, Roger
Stokes, John


Monro, Sir Hector
Stradling Thomas, Sir John


Montgomery, Sir Fergus
Sumberg, David


Moore, Rt Hon John
Tapsell, Sir Peter


Morris, M (N'hampton S)
Taylor, Ian (Esher)


Morrison, Hon Sir Charles
Taylor, John M (Solihull)


Moss, Malcolm
Tebbit, Rt Hon Norman


Moynihan, Hon Colin
Temple-Morris, Peter


Neale, Gerrard
Thatcher, Rt Hon Margaret


Needham, Richard
Thompson, D. (Calder Valley)


Nelson, Anthony
Thompson, Patrick (Norwich N)


Neubert, Michael
Thorne, Neil


Newton, Rt Hon Tony
Thornton, Malcolm


Nicholson, David (Taunton)
Thurnham, Peter


Nicholson, Emma (Devon West)
Townend, John (Bridlington)


Onslow, Rt Hon Cranley
Townsend, Cyril D. (B'heath)


Oppenheim, Phillip
Tracey, Richard


Page, Richard
Tredinnick, David


Paice, James
Trippier, David


Parkinson, Rt Hon Cecil
Trotter, Neville


Patnick, Irvine
Twinn, Dr Ian


Patten, John (Oxford W)
Vaughan, Sir Gerard


Pattie, Rt Hon Sir Geoffrey
Waddington, Rt Hon David


Pawsey, James
Wakeham, Rt Hon John


Peacock, Mrs Elizabeth
Waldegrave, Hon William


Porter, Barry (Wirral S)
Walden, George


Porter, David (Waveney)
Walker, Bill (T'side North)


Portillo, Michael
Waller, Gary


Powell, William (Corby)
Walters, Dennis


Price, Sir David
Ward, John


Raffan, Keith
Wardle, Charles (Bexhill)


Raison, Rt Hon Timothy
Warren, Kenneth


Rathbone, Tim
Watts, John


Redwood, John
Wheeler, John


Renton, Tim
Whitney, Ray


Rhodes James, Robert
Widdecombe, Ann


Rhys Williams, Sir Brandon
Wilkinson, John


Riddick, Graham
Wilshire, David


Ridley, Rt Hon Nicholas
Wolfson, Mark


Ridsdale, Sir Julian
Wood, Timothy


Roberts, Wyn (Conwy)
Woodcock, Mike


Roe, Mrs Marion
Yeo, Tim


Rossi, Sir Hugh
Young, Sir George (Acton)


Rost, Peter



Rowe, Andrew
Tellers for the Ayes:


Rumbold, Mrs Angela
Mr. Mark Lennox-Boyd and


Ryder, Richard
Mr. Peter Lloyd.


NOES


Abbott, Ms Diane
Alton, David


Adams, Allen (Paisley N)
Archer, Rt Hon Peter


Allen, Graham
Armstrong, Hilary





Ashdown, Paddy
Golding, Mrs Llin


Ashley, Rt Hon Jack
Gordon, Mildred


Ashton, Joe
Gould, Bryan


Banks, Tony (Newham NW)
Grant, Bernie (Tottenham)


Barnes, Harry (Derbyshire NE)
Griffiths, Nigel (Edinburgh S)


Barron, Kevin
Griffiths, Win (Bridgend)


Battle, John
Grocott, Bruce


Beckett, Margaret
Hattersley, Rt Hon Roy


Beith, A. J.
Haynes, Frank


Bell, Stuart
Healey, Rt Hon Denis


Benn, Rt Hon Tony
Heffer, Eric S.


Bennett, A. F. (D'nt'n &amp; R'dish)
Henderson, Doug


Bermingham, Gerald
Hinchliffe, David


Bidwell, Sydney
Hogg, N. (C'nauld &amp; Kilsyth)


Blair, Tony
Holland, Stuart


Boyes, Roland
Home Robertson, John


Bradley, Keith
Howarth, George (Knowsley N)


Bray, Dr Jeremy
Howell, Rt Hon D. (S'heath)


Brown, Gordon (D'mline E)
Howells, Geraint


Brown, Nicholas (Newcastle E)
Hoyle, Doug


Bruce, Malcolm (Gordon)
Hughes, John (Coventry NE)


Buchan, Norman
Hughes, Robert (Aberdeen N)


Caborn, Richard
Hughes, Roy (Newport E)


Callaghan, Jim
Hughes, Sean (Knowsley S)


Campbell, Menzies (Fife NE)
Hughes, Simon (Southwark)


Campbell, Ron (Blyth Valley)
Hume, John


Campbell-Savours, D. N.
Illsley, Eric


Canavan, Dennis
Ingram, Adam


Carlile, Alex (Mont'g)
Janner, Greville


Clark, Dr David (S Shields)
John, Brynmor


Clarke, Tom (Monklands W)
Jones, Barry (Alyn &amp; Deeside)


Clay, Bob
Jones, leuan (Ynys Môn)


Clelland, David
Kaufman, Rt Hon Gerald


Clwyd, Mrs Ann
Kennedy, Charles


Cohen, Harry
Kinnock, Rt Hon Neil


Coleman, Donald
Kirkwood, Archy


Cook, Frank (Stockton N)
Leadbitter, Ted


Cook, Robin (Livingston)
Leighton, Ron


Corbyn, Jeremy
Lestor, Joan (Eccles)


Cousins, Jim
Lewis, Terry


Cox, Tom
Livingstone, Ken


Crowther, Stan
Livsey, Richard


Cryer, Bob
Lloyd, Tony (Stretford)


Cummings, John
Lofthouse, Geoffrey


Cunlirfe, Lawrence
McAllion, John


Cunningham, Dr John
McAvoy, Thomas


Dalyell, Tarn
McCartney, Ian


Darling, Alistair
Macdonald, Calum A.


Davies, Ron (Caerphilly)
McFall, John


Davis, Terry (B'ham Hodge H'I)
McGrady, Eddie


Dewar, Donald
McKay, Allen (Barnsley West)


Dixon, Don
McKelvey, William


Dobson, Frank
McLeish, Henry


Doran, Frank
McNamara, Kevin


Douglas, Dick
McTaggart, Bob


Duffy, A. E. P.
McWilliam, John


Dunnachie, Jimmy
Madden, Max


Dunwoody, Hon Mrs Gwyneth
Mahon, Mrs Alice


Eadie, Alexander
Marek, Dr John


Eastham, Ken
Marshall, David (Shettleston)


Evans, John (St Helens N)
Marshall, Jim (Leicester S)


Ewing, Harry (Falkirk E)
Martin, Michael J. (Springburn)


Ewing, Mrs Margaret (Moray)
Maxton, John


Fatchett, Derek
Meacher, Michael


Faulds, Andrew
Michie, Bill (Sheffield Heeley)


Field, Frank (Birkenhead)
Millan, Rt Hon Bruce


Fields, Terry (L'pool B G'n)
Mitchell, Austin (G't Grimsby)


Fisher, Mark
Moonie, Dr Lewis


Flannery, Martin
Morgan, Rhodri


Flynn, Paul
Morris, Rt Hon J. (Aberavon)


Foot, Rt Hon Michael
Mowlam, Marjorie


Foster, Derek
Mullin, Chris


Foulkes, George
Murphy, Paul


Fraser, John
Nellist, Dave


Galbraith, Sam
Oakes, Rt Hon Gordon


Galloway, George
O'Neill, Martin


Garrett, John (Norwich South)
Orme, Rt Hon Stanley


George, Bruce
Parry, Robert


Gilbert, Rt Hon Dr John
Patchett, Terry


Godman, Dr Norman A.
Pendry, Tom






Pike, Peter L.
Steel, Rt Hon David


Powell, Ray (Ogmore)
Stott, Roger


Prescott, John
Strang, Gavin


Primarolo, Dawn
Straw, Jack


Quin, Ms Joyce
Taylor, Mrs Ann (Dewsbury)


Randall, Stuart
Taylor, Matthew (Truro)


Redmond, Martin
Thomas, Dr Dafydd Elis


Rees, Rt Hon Merlyn
Turner, Dennis


Reid, Dr John
Vaz, Keith


Richardson, Jo
Wall, Pat


Robertson, George
Walley, Joan


Robinson, Geoffrey
Wardell, Gareth (Gower)


Rogers, Allan
Wareing, Robert N.


Rooker, Jeff
Welsh, Andrew (Angus E)


Ross, Ernie (Dundee W)
Welsh, Michael (Doncaster N)


Rowlands, Ted
Wigley, Dafydd


Sedgemore, Brian
Williams, Rt Hon Alan


Sheerman, Barry
Williams, Alan W. (Carm'then)


Sheldon, Rt Hon Robert
Wilson, Brian


Shore, Rt Hon Peter
Winnick, David


Short, Clare
Wise, Mrs Audrey


Skinner, Dennis
Worthington, Tony


Smith, Andrew (Oxford E)
Young, David (Bolton SE)


Smith, C. (Isl'ton &amp; F'bury)



Smith, Cyril (Rochdale)
Tellers for the Noes:


Smith, Rt Hon J. (Monk'ds E)
Mrs. Ray Michie and


Snape, Peter
Mr. Ronnie Fearn.


Soley, Clive

Question accordingly agreed to.

Mr. Speaker: May I have the leave of the House to put motions 20, 21 and 22 together? There does not appear to be any objection to that being done.

20. RELIEF FOR INTEREST (DEPENDENT RELATIVE'S RESIDENCE)

Resolved,
That—

(1) In sections 355(1)(a) and 357(2)(a) of the Income and Corporation Taxes Act 1988 the words "or of a dependent relative or former or separated spouse of his." shall not have effect in relation to payments of interest made on or after 6th April 1988.
(2) Paragraph (1) above shall not apply where the interest is paid on a loan made before 6th April 1988 if interest paid on it at a relevant time was eligible for relief under section 353 of that Act only because the land, caravan or house-boat concerned was used as the only or main residence of the same dependent relative or former or separated spouse.

(3) In paragraph (2) above "relevant time" means—

(a) the last time when interest was paid on the loan before 6th April 1988, or
(b) if no interest was paid on it before that date, any time within the period of 12 months (or any longer period substituted in relation to the case under section 355(2) of that Act) after the date on which the loan was made;

but sub-paragraph (b) above shall not apply if at any time after the date on which the loan was made and before the date on which the land, caravan or house-boat was first used as mentioned in paragraph (2) above, the land, caravan or house-boat was used for any other purpose.
(4) In section 358(4)(a) of that Act (relief where borrower deceased) the words "or of any dependent relative of the deceased" shall not have effect in relation to payments of interest made on or after 6th April 1988 unless—

(a) the deceased died before that date, and
(b) the land, caravan or house-boat was used as the only or main residence of the dependent relative before that date.

(5) Where it is proved by written evidence that a loan made on or after 6th April 1988 was made in pursuance of an offer made by the lender before that date and that the offer either was in writing or was evidenced by a note or memorandum made by the lender before that date, the loan shall be deemed for the purposes of this Resolution to have been made before that date.
(6) Interest paid by a housing association shall not be relevant loan interest for the purposes of Part IX of that Act where by virtue of this Resolution it would not be relevant loan interest if paid by a member of the association; and in this paragraph "housing association" means a housing association for the time being approved for the purposes of section 488 of that Act or a self-build society for the time being approved for the purposes of section 489.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

21. BENEFITS IN KIND (CARS)

Resolved,
That—

(1) For the year 1988–89 and subsequent years of assessment, Schedule 6 to the Income and Corporation Taxes Act 1988 (taxation of directors and others in respect of cars) shall have effect with the substitution for Part I (tables of flat rate cash equivalents) of the following—

PART I


TABLES OF FLAT RATE CASH EQUIVALENTS


TABLE A


Cars with an original market value up to £19,250 and having a cylinder capacity


Cylinder capacity of car in cubic centimetres
Age of car at end of relevant year of assessment



Under 4 years
4 years or more


1400 or less… … … … … … … … … … …
£1,050
£700


More than 1400 but not more than 2000… … … …
£1,400
£940


More than 2000… … … … … … … … … …
£2,200
£1,450

TABLE B


Cars with an original market value up to £19,250 and not having a cylinder capacity


Original market value of car
Age of car at end of relevant year of assessment



Under 4 years
4 years or more


Less than £6,000 … … … … … … … … … …
£1,050
£700


£6,000 or more but less than £8,500… … … … … …
£1,400
£940


£8,500 or more but not more than £19,250… … … … …
£2,200
£1,450

TABLE C


Cars with an original market value of more than £19,250


Original market value of car
Age of car at end of relevant year of assessment



Under 4 years
4 years or more


More than £19,250 but not more than £29,000
£2,900
£1,940


More than £29,000… … … … … … … … …
£4,600
£3,060

(2) This Resolution shall not require any change to be made in the amounts deductible or repayable under section 203 of the Income and Corporation Taxes Act 1988 (pay as you earn) before 15th June 1988.

And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

22. WOODLANDS

Resolved,
That provision may be made about the commercial occupation of woodlands.—[Mr. Lawson.]

23. BUSINESS EXPANSION SCHEME

Question put,
That provision may be made amending Chapter III of Part VII of the Income and Corporation Taxes Act 1988 and the corresponding enactments repealed by that Act. —[Mr. Lawson.]

The House divided: Ayes 335, Noes 218.

Division No. 221]
[10.54 pm


AYES


Adley, Robert
Batiste, Spencer


Aitken, Jonathan
Beaumont-Dark, Anthony


Alexander, Richard
Bellingham, Henry


Alison, Rt Hon Michael
Bendall, Vivian


Allason, Rupert
Bennett, Nicholas (Pembroke)


Amess, David
Benyon, W.


Amos, Alan
Bevan, David Gilroy


Arbuthnot, James
Biffen, Rt Hon John


Arnold, Jacques (Gravesham)
Biggs-Davison, Sir John


Arnold, Tom (Hazel Grove)
Blackburn, Dr John G.


Ashby, David
Blaker, Rt Hon Sir Peter


Aspinwall, Jack
Bonsor, Sir Nicholas


Atkins, Robert
Boscawen, Hon Robert


Baker, Rt Hon K. (Mole Valley)
Bottomley, Peter


Baker, Nicholas (Dorset N)
Bottomley, Mrs Virginia


Baldry, Tony
Bowden, A (Brighton K'pto'n)


Banks, Robert (Harrogate)
Bowden, Gerald (Dulwich)





Bowis, John
Cope, John


Boyson, Rt Hon Dr Sir Rhodes
Cormack, Patrick


Brandon-Bravo, Martin
Cran, James


Brazier, Julian
Critchley, Julian


Bright, Graham
Currie, Mrs Edwina


Brittan, Rt Hon Leon
Davies, Q. (Stamf'd &amp; Spald'g)


Brooke, Rt Hon Peter
Davis, David (Boothferry)


Brown, Michael (Brigg &amp; Cl't's)
Day, Stephen


Browne, John (Winchester)
Devlin, Tim


Bruce, Ian (Dorset South)
Dickens, Geoffrey


Buchanan-Smith, Rt Hon Alick
Dorrell, Stephen


Buck, Sir Antony
Douglas-Hamilton, Lord James


Budgen, Nicholas
Dover, Den


Burns, Simon
Dunn, Bob


Burt, Alistair
Durant, Tony


Butcher, John
Eggar, Tim


Butler, Chris
Emery, Sir Peter


Butterfill, John
Evans, David (Welwyn Hatf'd)


Carlisle, John, (Luton N)
Evennett, David


Carlisle, Kenneth (Lincoln)
Fairbairn, Nicholas


Carrington, Matthew
Fallon, Michael


Carttiss, Michael
Farr, Sir John


Cash, William
Favell, Tony


Channon, Rt Hon Paul
Fenner, Dame Peggy


Chapman, Sydney
Field, Barry (Isle of Wight)


Chope, Christopher
Fookes, Miss Janet


Churchill, Mr
Forman, Nigel


Clark, Hon Alan (Plym'th S'n)
Forsyth, Michael (Stirling)


Clark, Dr Michael (Rochford)
Forth, Eric


Clark, Sir W. (Croydon S)
Fowler, Rt Hon Norman


Clarke, Rt Hon K. (Rushcliffe)
Franks, Cecil


Colvin, Michael
Freeman, Roger


Conway, Derek
French, Douglas


Coombs, Anthony (Wyre F'rest)
Fry, Peter


Coombs, Simon (Swindon)
Gale, Roger






Gardiner, George
Lilley, Peter


Garel-Jones, Tristan
Lloyd, Sir Ian (Havant)


Gill, Christopher
Lord, Michael


Gilmour, Rt Hon Sir Ian
Luce, Rt Hon Richard


Glyn, Dr Alan
Lyell, Sir Nicholas


Goodhart, Sir Philip
McCrindle, Robert


Goodlad, Alastair
Macfarlane, Sir Neil


Goodson-Wickes, Dr Charles
MacGregor, Rt Hon John


Gorman, Mrs Teresa
MacKay, Andrew (E Berkshire)


Gorst, John
Maclean, David


Gow, Ian
McLoughlin, Patrick


Gower, Sir Raymond
McNair-Wilson, M. (Newbury)


Grant, Sir Anthony (CambsSW)
McNair-Wilson, P. (New Forest)


Greenway, Harry (Ealing N)
Madel, David


Greenway, John (Ryedale)
Major, Rt Hon John


Gregory, Conal
Malins, Humfrey


Griffiths, Sir Eldon (Bury St E')
Mans, Keith


Griffiths, Peter (Portsmouth N)
Maples, John


Grist, Ian
Marland, Paul


Ground, Patrick
Marshall, John (Hendon S)


Grylls, Michael
Marshall, Michael (Arundel)


Hamilton, Hon Archie (Epsom)
Martin, David (Portsmouth S)


Hamilton, Neil (Tatton)
Mates, Michael


Hampson, Dr Keith
Maude, Hon Francis


Hanley, Jeremy
Maxwell-Hyslop, Robin


Hannam, John
Mayhew, Rt Hon Sir Patrick


Hargreaves, A. (B'ham H'll Gr')
Mellor, David


Hargreaves, Ken (Hyndburn)
Meyer, Sir Anthony


Harris, David
Miller, Hal


Hawkins, Christopher
Mills, Iain


Hayes, Jerry
Miscampbell, Norman


Hayhoe, Rt Hon Sir Barney
Mitchell, Andrew (Gedling)


Hayward, Robert
Mitchell, David (Hants NW)


Heath, Rt Hon Edward
Moate, Roger


Heathcoat-Amory, David
Monro, Sir Hector


Heddle, John
Montgomery, Sir Fergus


Heseltine, Rt Hon Michael
Moore, Rt Hon John


Hicks, Mrs Maureen (Wolv' NE)
Morris, M (N'hampton S)


Higgins, Rt Hon Terence L.
Morrison, Hon Sir Charles


Hind, Kenneth
Moss, Malcolm


Hogg, Hon Douglas (Gr'th'm)
Moynihan, Hon Colin


Holt, Richard
Neale, Gerrard


Hordern, Sir Peter
Needham, Richard


Howard, Michael
Nelson, Anthony


Howarth, Alan (Strat'd-on-A)
Neubert, Michael


Howarth, G. (Cannock &amp; B'wd)
Newton, Rt Hon Tony


Howell, Ralph (North Norfolk)
Nicholson, David (Taunton)


Hughes, Robert G. (Harrow W)
Nicholson, Emma (Devon West)


Hunt, David (Wirral W)
Onslow, Rt Hon Cranley


Hunt, John (Ravensbourne)
Oppenheim, Phillip


Hunter, Andrew
Page, Richard


Hurd, Rt Hon Douglas
Paice, James


Irvine, Michael
Parkinson, Rt Hon Cecil


Irving, Charles
Patnick, Irvine


Jack, Michael
Patten, John (Oxford W)


Jackson, Robert
Pattie, Rt Hon Sir Geoffrey


Janman, Tim
Pawsey, James


Jessel, Toby
Peacock, Mrs Elizabeth


Johnson Smith, Sir Geoffrey
Porter, Barry (Wirral S)


Jones, Gwilym (Cardiff N)
Porter, David (Waveney)


Jones, Robert B (Herts W)
Portillo, Michael


Jopling, Rt Hon Michael
Powell, William (Corby)


Kellett-Bowman, Dame Elaine
Price, Sir David


Kilfedder, James
Raffan, Keith


King, Roger (B'ham N'thfield)
Raison, Rt Hon Timothy


Kirkhope, Timothy
Rathbone, Tim


Knapman, Roger
Redwood, John


Knight, Greg (Derby North)
Renton, Tim


Knight, Dame Jill (Edgbaston)
Rhodes James, Robert


Knowles, Michael
Rhys Williams, Sir Brandon


Knox, David
Riddick, Graham


Lamont, Rt Hon Norman
Ridley, Rt Hon Nicholas


Lang, Ian
Ridsdale, Sir Julian


Latham, Michael
Roberts, Wyn (Conwy)


Lawrence, Ivan
Roe, Mrs Marion


Lawson, Rt Hon Nigel
Rossi, Sir Hugh


Lee, John (Pendle)
Rost, Peter


Leigh, Edward (Gainsbor'gh)
Rowe, Andrew


Lester, Jim (Broxtowe)
Rumbold, Mrs Angela


Lightbown, David
Ryder, Richard





Sackville, Hon Tom
Thompson, Patrick (Norwich N)


Sainsbury, Hon Tim
Thorne, Neil


Sayeed, Jonathan
Thornton, Malcolm


Scott, Nicholas
Thurnham, Peter


Shaw, David (Dover)
Townend, John (Bridlington)


Shaw, Sir Giles (Pudsey)
Townsend, Cyril D. (B'heath)


Shaw, Sir Michael (Scarb')
Tracey, Richard


Shelton, William (Streatham)
Tredinnick, David


Shephard, Mrs G. (Norfolk SW)
Trippier, David


Shepherd, Colin (Hereford)
Trotter, Neville


Shepherd, Richard (Aldridge)
Twinn, Dr Ian


Shersby, Michael
Vaughan, Sir Gerard


Sims, Roger
Waddington, Rt Hon David


Skeet, Sir Trevor
Wakeham, Rt Hon John


Smith, Tim (Beaconsfield)
Waldegrave, Hon William


Soames, Hon Nicholas
Walden, George


Speed, Keith
Walker, Bill (T'side North)


Speller, Tony
Waller, Gary


Spicer, Sir Jim (Dorset W)
Walters, Dennis


Spicer, Michael (S Worcs)
Ward, John


Squire, Robin
Wardle, Charles (Bexhill)


Stanbrook, Ivor
Warren, Kenneth


Steen, Anthony
Watts, John


Stern, Michael
Wheeler, John


Stevens, Lewis
Whitney, Ray


Stewart, Allan (Eastwood)
Widdecombe, Ann


Stewart, Andy (Sherwood)
Wilkinson, John


Stewart, Ian (Hertfordshire N)
Wilshire, David


Stokes, John
Wolfson, Mark


Stradling Thomas, Sir John
Wood, Timothy


Sumberg, David
Woodcock, Mike


Tapsell, Sir Peter
Yeo, Tim


Taylor, Ian (Esher)
Young, Sir George (Acton)


Taylor, John M (Solihull)



Tebbit, Rt Hon Norman
Tellers for the Ayes:


Temple-Morris, Peter
Mr. Mark Lennox-Boyd and


Thatcher, Rt Hon Margaret
Mr. Peter Lloyd.


Thompson, D. (Calder Valley)



NOES


Abbott, Ms Diane
Cohen, Harry


Adams, Allen (Paisley N)
Coleman, Donald


Allen, Graham
Cook, Frank (Stockton N)


Alton, David
Cook, Robin (Livingston)


Archer, Rt Hon Peter
Corbyn, Jeremy


Armstrong, Hilary
Cousins, Jim


Ashdown, Paddy
Cox, Tom


Ashley, Rt Hon Jack
Crowther, Stan


Ashton, Joe
Cryer, Bob


Banks, Tony (Newham NW)
Cummings, John


Barnes, Harry (Derbyshire NE)
Cunliffe, Lawrence


Barron, Kevin
Cunningham, Dr John


Battle, John
Dalyell, Tam


Beckett, Margaret
Darling, Alistair


Beith, A. J.
Davies, Ron (Caerphilly)


Bell, Stuart
Davis, Terry (B'ham Hodge H'I


Benn, Rt Hon Tony
Dewar, Donald


Bennett, A. F. (D'nt'n &amp;ish)
Dixon, Don


Bermingham, Gerald
Dobson, Frank


Bidwell, Sydney
Doran, Frank


Blair, Tony
Douglas, Dick


Boyes, Roland
Duffy, A. E. P.


Bradley, Keith
Dunnachie, Jimmy


Bray, Dr Jeremy
Dunwoody, Hon Mrs Gwyneth


Brown, Gordon (D'mline E)
Eadie, Alexander


Brown, Nicholas (Newcastle E)
Eastham, Ken


Bruce, Malcolm (Gordon)
Evans, John (St Helens N)


Buchan, Norman
Ewing, Harry (Falkirk E)


Caborn, Richard
Ewing, Mrs Margaret (Moray)


Callaghan, Jim
Fatchett, Derek


Campbell, Menzies (Fife NE)
Faulds, Andrew


Campbell, Ron (Blyth Valley)
Fearn, Ronald


Campbell-Savours, D. N.
Field, Frank (Birkenhead)


Canavan, Dennis
Fields, Terry (L'pool B G'n)


Carlile, Alex (Mont'g)
Fisher, Mark


Clark, Dr David (S Shields)
Flannery, Martin


Clarke, Tom (Monklands W)
Flynn, Paul


Clay, Bob
Foot, Rt Hon Michael


Clelland, David
Foster, Derek


Clwyd, Mrs Ann
Foulkes, George






Fraser, John
Michie, Mrs Ray (Arg'l &amp; Bute)


Galbraith, Sam
Millan, Rt Hon Bruce


Galloway, George
Mitchell, Austin (G't Grimsby)


Garrett, John (Norwich South)
Moonie, Dr Lewis


George, Bruce
Morgan, Rhodri


Gilbert, Rt Hon Dr John
Morris, Rt Hon J. (Aberavon)


Godman, Dr Norman A.
Mowlam, Marjorie


Golding, Mrs Llin
Mullin, Chris


Gordon, Mildred
Murphy, Paul


Gould, Bryan
Nellist, Dave


Grant, Bernie (Tottenham)
Oakes, Rt Hon Gordon


Griffiths, Nigel (Edinburgh S)
O'Neill, Martin


Griffiths, Win (Bridgend)
Orme, Rt Hon Stanley


Grocott, Bruce
Parry, Robert


Hattersley, Rt Hon Roy
Patchett, Terry


Healey, Rt Hon Denis
Pendry, Tom


Heffer, Eric S.
Pike, Peter L.


Henderson, Doug
Prescott, John


Hinchliffe, David
Primarolo, Dawn


Hogg, N. (C'nauld &amp; Kilsyth)
Quin, Ms Joyce


Holland, Stuart
Randall, Stuart


Home Robertson, John
Redmond, Martin


Howarth, George (Knowsley N)
Rees, Rt Hon Merlyn


Howell, Rt Hon D. (S'heath)
Reid, Dr John


Howells, Geraint
Richardson, Jo


Hoyle, Doug
Robertson, George


Hughes, John (Coventry NE)
Robinson, Geoffrey


Hughes, Robert (Aberdeen N)
Rogers, Allan


Hughes, Roy (Newport E)
Rooker, Jeff


Hughes, Sean (Knowsley S)
Ross, Ernie (Dundee W)


Hughes, Simon (Southwark)
Rowlands, Ted


Hume, John
Ruddock, Joan


Illsley, Eric
Sedgemore, Brian


Ingram, Adam
Sheerman, Barry


Janner, Greville
Sheldon, Rt Hon Robert


John, Brynmor
Shore, Rt Hon Peter


Jones, Barry (Alyn &amp; Deeside)
Short, Clare


Jones, leuan (Ynys Môn)
Skinner, Dennis


Kaufman, Rt Hon Gerald
Smith, Andrew (Oxford E)


Kennedy, Charles
Smith, C. (Isl'ton &amp; F'bury)


Kinnock, Rt Hon Neil
Smith, Cyril (Rochdale)


Kirkwood, Archy
Smith, Rt Hon J. (Monk'ds E)


Leadbitter, Ted
Snape, Peter


Leighton, Ron
Soley, Clive


Lestor, Joan (Eccles)
Steel, Rt Hon David


Lewis, Terry
Stott, Roger


Livingstone, Ken
Strang, Gavin


Livsey, Richard
Straw, Jack


Lloyd, Tony (Stretford)
Taylor, Mrs Ann (Dewsbury)


Lofthouse, Geoffrey
Taylor, Matthew (Truro)


McAllion, John
Thomas, Dr Dafydd Elis


McAvoy, Thomas
Turner, Dennis


McCartney, Ian
Vaz, Keith


Macdonald, Calum A.
Wall, Pat


McFall, John
Walley, Joan


McGrady, Eddie
Warden, Gareth (Gower)


McKay, Allen (Barnsley West)
Wareing, Robert N.


McKelvey, William
Welsh, Andrew (Angus E)


McLeish, Henry
Welsh, Michael (Doncaster N)


McNamara, Kevin
Wigley, Dafydd


McTaggart, Bob
Williams, Rt Hon Alan


McWilliam, John
Williams, Alan W. (Carm'then)


Madden, Max
Wilson, Brian


Mahon, Mrs Alice
Winnick, David


Marek, Dr John
Wise, Mrs Audrey


Marshall, David (Shettleston)
Worthington, Tony


Marshall, Jim (Leicester S)
Young, David (Bolton SE)


Martin, Michael J. (Springburn)



Maxton, John
Tellers for the Noes:


Meacher, Michael
Mr. Frank Haynes and


Michie, Bill (Sheffield Heeley)
Mr. Ray Powell.

Question accordingly agreed to.

Mr. Sneaker: With the leave of the House, I shall put together motions Nos. 24 to 34.

24. PAYMENTS ON TERMINA'rION OF EMPLOYMENT, ETC.

Resolved,
That provision may be made abolishing relief under paragraphs 4 to 7 of Schedule 11 to the Income and Corporation Taxes Act 1988.—[Mr. Lawson.]

25. OIL LICENCES

Resolved,
That provision may he made with respect to the application of—

(a) the Capital Gains Tax Act 1979 and any enactment which falls to be construed as one with that Act,
(b) certain provisions of the Capital Allowances Act 1968, and
(c) section 55 of and Schedules 13 and 14 to the Finance Act 1986 (capital allowances in respect of mineral extraction),

in relation to certain disposals (including part disposals) of licences under the Petroleum (Production) Act 1934 and the Petroleum (Production) Act (Northern Ireland) 1964, being disposals occurring before as well as after the passing of this Resolution.—[Mr. Lawson.]

26. COMPANY RESIDENCE AND MIGRATION

Resolved,
That charges to corporation tax may be imposed by provisions for determining whet her or not a company is to be regarded as resident in the United Kingdom, and provisions relating to companies ceasing to be resident there.—[Mr. Lawson.]

27. CHARITIES

Resolved,
That, for the year 1988–89 and subsequent years of assessment, section 202(7) of the Income and Corporation Taxes Act 1988 (which limits to £120 the deductions attracting relief) shall have effect with the substitution of "£240" for "£120".
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.—[Mr. Lawson.]

28. ENTERTAINMENT EXPENSES

Resolved,
That provision may be made repealing section 577(2) of the Income and Corporation Taxes Act 1988. —[Mr. Lawson.]

29. PREMIUMS FOR LEASES, ETC.

Resolved,
That provision may be made abolishing relief under Schedule 2 to the Income and Corporation Taxes Act 1988. —[Mr. Lawson.]

30. UNDERWRITERS

Resolved,
That provision (including provision for the years of assessment 1985–86, 1986–87 and 1987–88) may be made about underwriters.—[Mr. Lawson.]

31. FOREIGN PUBLIC REVENUE DIVIDENDS

Resolved,
That provision may be made about dividends payable out of any public revenue, within the meaning of Part III of the Income and Corporation Taxes Act 1988, other than the public revenue of the United Kingdom.—[Mr. Lawson.]

32. EMPLOYEE SHARE ACQUISITIONS

Resolved,
That provision (including provision having retrospective effect) may be made about the acquisition of shares or interests in shares by directors or employees (or prospective or former directors or employees).—[Mr. Lawson.]

33. CAPITAL ALLOWANCES

Resolved,
That provision may be made with respect to allowances under the Capital Allowances Act 1968 or Chapter I of Part III of the Finance Act 1971.—[Mr. Lawson.]

34. CAPITAL GAINS TAX (RATES)

Resolved,
That provision may be made about the rates at which capital gains tax is chargeable and for related purposes.—[Mr. Lawson.]

35. CAPITAL GAINS (ASSETS HELD ON 31ST MARCH 1982)

Question put,
That provision may be made as to the taxation of capital gains and losses on the disposal of assets acquired on or before 31st March 1982, and as to related matters.—[Mr. Lawson.]

The House divided: Ayes 358, Noes 191.

Division No. 222]
[11.06 pm


AYES


Adley, Robert
Bruce, Ian (Dorset South)


Aitken, Jonathan
Bruce, Malcolm (Gordon)


Alexander, Richard
Buchanan-Smith, Rt Hon Alick


Alison, Rt Hon Michael
Buck, Sir Antony


Allason, Rupert
Budgen, Nicholas


Alton, David
Burns, Simon


Amess, David
Burt, Alistair


Amos, Alan
Butcher, John


Arbuthnot, James
Butler, Chris


Arnold, Jacques (Gravesham)
Butterfill, John


Arnold, Tom (Hazel Grove)
Campbell, Menzies (Fife NE)


Ashby, David
Carlile, Alex (Mont'g)


Ashdown, Paddy
Carlisle, John, (Luton N)


Aspinwall, Jack
Carlisle, Kenneth (Lincoln)


Atkins, Robert
Carrington, Matthew


Baker, Rt Hon K. (Mole Valley)
Carttiss, Michael


Baker, Nicholas (Dorset N)
Cash, William


Baldry, Tony
Channon, Rt Hon Paul


Banks, Robert (Harrogate)
Chapman, Sydney


Batiste, Spencer
Chope, Christopher


Beaumont-Dark, Anthony
Churchill, Mr


Beggs, Roy
Clark, Hon Alan (Plym'th S'n)


Beith, A. J.
Clark, Dr Michael (Rochford)


Bellingham, Henry
Clark, Sir W. (Croydon S)


Bendall, Vivian
Clarke, Rt Hon K. (Rushcliffe)


Bennett, Nicholas (Pembroke)
Colvin, Michael


Benyon, W.
Conway, Derek


Bevan, David Gilroy
Coombs, Anthony (Wyre F'rest)


Biffen, Rt Hon John
Coombs, Simon (Swindon)


Biggs-Davison, Sir John
Cope, John


Blackburn, Dr John G.
Cormack, Patrick


Blaker, Rt Hon Sir Peter
Cran, James


Bonsor, Sir Nicholas
Critchley, Julian


Boscawen, Hon Robert
Currie, Mrs Edwina


Bottomley, Peter
Davies, Q. (Stamf'd &amp; Spald'g)


Bottomley, Mrs Virginia
Davis, David (Boothferry)


Bowden, A (Brighton K'pto'n)
Day, Stephen


Bowden, Gerald (Dulwich)
Devlin, Tim


Bowis, John
Dickens, Geoffrey


Boyson, Rt Hon Dr Sir Rhodes
Dorrell, Stephen


Brandon-Bravo, Martin
Douglas-Hamilton, Lord James


Brazier, Julian
Dover, Den


Bright, Graham
Dunn, Bob


Brittan, Rt Hon Leon
Durant, Tony


Brooke, Rt Hon Peter
Eggar, Tim


Brown, Michael (Brigg &amp; Cl't's)
Emery, Sir Peter


Browne, John (Winchester)
Evans, David (Welwyn Hatf'd)





Evennett, David
Jones, Gwilym (Cardiff N)


Fairbairn, Nicholas
Jones, Robert B (Herts W)


Fallon, Michael
Jopling, Rt Hon Michael


Farr, Sir John
Kellett-Bowman, Dame Elaine


Favell, Tony
Kennedy, Charles


Fearn, Ronald
Kilfedder, James


Fenner, Dame Peggy
King, Roger (B'ham N'thfield)


Field, Barry (Isle of Wight)
Kirkhope, Timothy


Fookes, Miss Janet
Kirkwood, Archy


Forman, Nigel
Knapman, Roger


Forsyth, Michael (Stirling)
Knight, Greg (Derby North)


Forsythe, Clifford (Antrim S)
Knight, Dame Jill (Edgbaston)


Forth, Eric
Knowles, Michael


Fowler, Rt Hon Norman
Knox, David


Franks, Cecil
Lamont, Rt Hon Norman


Freeman, Roger
Lang, Ian


French, Douglas
Latham, Michael


Fry, Peter
Lawrence, Ivan


Gale, Roger
Lawson, Rt Hon Nigel


Gardiner, George
Lee, John (Pendle)


Garel-Jones, Tristan
Leigh, Edward (Gainsbor'gh)


Gill, Christopher
Lester, Jim (Broxtowe)


Gilmour, Rt Hon Sir Ian
Lightbown, David


Glyn, Dr Alan
Lilley, Peter


Goodhart, Sir Philip
Livsey, Richard


Goodlad, Alastair
Lloyd, Sir Ian (Havant)


Goodson-Wickes, Dr Charles
Lord, Michael


Gorman, Mrs Teresa
Luce, Rt Hon Richard


Gorst, John
Lyell, Sir Nicholas


Gow, Ian
McCrindle, Robert


Gower, Sir Raymond
Macfarlane, Sir Neil


Grant, Sir Anthony (CambsSW)
MacGregor, Rt Hon John


Greenway, Harry (Ealing N)
MacKay, Andrew (E Berkshire)


Greenway, John (Ryedale)
Maclean, David


Gregory, Conal
McLoughlin, Patrick


Griffiths, Sir Eldon (Bury St E')
McNair-Wilson, M. (Newbury)


Griffiths, Peter (Portsmouth N)
McNair-Wilson, P. (New Forest)


Grist, Ian
Madel, David


Ground, Patrick
Maginnis, Ken


Grylls, Michael
Major, Rt Hon John


Hamilton, Hon Archie (Epsom)
Malins, Humfrey


Hamilton, Neil (Tatton)
Mans, Keith


Hampson, Dr Keith
Maples, John


Hanley, Jeremy
Marland, Paul


Hannam, John
Marshall, John (Hendon S)


Hargreaves, A. (B'ham H'll Gr')
Marshall, Michael (Arundel)


Hargreaves, Ken (Hyndburn)
Martin, David (Portsmouth S)


Harris, David
Mates, Michael


Hawkins, Christopher
Maude, Hon Francis


Hayes, Jerry
Maxwell-Hyslop, Robin


Hayhoe, Rt Hon Sir Barney
Mayhew, Rt Hon Sir Patrick


Hayward, Robert
Mellor, David


Heath, Rt Hon Edward
Meyer, Sir Anthony


Heathcoat-Amory, David
Michie, Mrs Ray (Arg'l &amp; Bute)


Heddle, John
Miller, Hal


Heseltine, Rt Hon Michael
Mills, Iain


Hicks, Mrs Maureen (Wolv' NE)
Miscampbell, Norman


Higgins, Rt Hon Terence L.
Mitchell, Andrew (Gedling)


Hind, Kenneth
Mitchell, David (Hants NW)


Hogg, Hon Douglas (Gr'th'm)
Moate, Roger


Holt, Richard
Molyneaux, Rt Hon James


Hordern, Sir Peter
Monro, Sir Hector


Howard, Michael
Montgomery, Sir Fergus


Howarth, Alan (Strat'd-on-A)
Moore, Rt Hon John


Howarth, G. (Cannock &amp; B'wd)
Morris, M (N'hampton S)


Howell, Ralph (North Norfolk)
Morrison, Hon Sir Charles


Howells, Geraint
Moss, Malcolm


Hughes, Robert G. (Harrow W)
Moynihan, Hon Colin


Hughes, Simon (Southwark)
Neale, Gerrard


Hunt, David (Wirral W)
Needham, Richard


Hunt, John (Ravensbourne)
Nelson, Anthony


Hunter, Andrew
Neubert, Michael


Hurd, Rt Hon Douglas
Newton, Rt Hon Tony


Irvine, Michael
Nicholson, David (Taunton)


Irving, Charles
Nicholson, Emma (Devon West)


Jack, Michael
Onslow, Rt Hon Cranley


Jackson, Robert
Oppenheim, Phillip


Janman, Tim
Page, Richard


Jessel, Toby
Paice, James


Johnson Smith, Sir Geoffrey
Parkinson, Rt Hon Cecil






Patnick, Irvine
Stern, Michael


Patten, John (Oxford W)
Stevens, Lewis


Pattie, Rt Hon Sir Geoffrey
Stewart, Allan (Eastwood)


Pawsey, James
Stewart, Andy (Sherwood)


Peacock, Mrs Elizabeth
Stewart, Ian (Hertfordshire N)


Porter, Barry (Wirral S)
Stokes, John


Porter, David (Waveney)
Stradling Thomas, Sir John


Portillo, Michael
Sumberg, David


Powell, William (Corby)
Tapsell, Sir Peter


Price, Sir David
Taylor, Ian (Esher)


Raffan, Keith
Taylor, John M (Solihull)


Raison, Rt Hon Timothy
Taylor, Matthew (Truro)


Rathbone, Tim
Tebbit, Rt Hon Norman


Redwood, John
Temple-Morris, Peter


Renton, Tim
Thatcher, Rt Hon Margaret


Rhodes James, Robert
Thompson, D. (Calder Valley)


Rhys Williams, Sir Brandon
Thompson, Patrick (Norwich N)


Riddick, Graham
Thorne, Neil


Ridley, Rt Hon Nicholas
Thornton, Malcolm


Ridsdale, Sir Julian
Thurnham, Peter


Roberts, Wyn (Conwy)
Townend, John (Bridlington)


Roe, Mrs Marion
Townsend, Cyril D. (B'heath)


Ross, William (Londonderry E)
Tracey, Richard


Rossi, Sir Hugh
Tredinnick, David


Rost, Peter
Trippier, David


Rowe, Andrew
Trotter, Neville


Rumbold, Mrs Angela
Twinn, Dr Ian


Ryder, Richard
Vaughan, Sir Gerard


Sackville, Hon Tom
Waddington, Rt Hon David


Sainsbury, Hon Tim
Wakeham, Rt Hon John


Sayeed, Jonathan
Waldegrave, Hon William


Scott, Nicholas
Walden, George


Shaw, David (Dover)
Walker, A. Cecil (Belfast N)


Shaw, Sir Giles (Pudsey)
Walker, Bill (T'side North)


Shaw, Sir Michael (Scarb')
Waller, Gary


Shelton, William (Streatham)
Walters, Dennis


Shephard, Mrs G. (Norfolk SW)
Ward, John


Shepherd, Colin (Hereford)
Wardle, Charles (Bexhill)


Shepherd, Richard (Aldridge)
Warren, Kenneth


Shersby, Michael
Watts, John


Sims, Roger
Wheeler, John


Skeet, Sir Trevor
Whitney, Ray


Smith, Cyril (Rochdale)
Widdecombe, Ann


Smith, Tim (Beaconsfield)
Wilkinson, John


Smyth, Rev Martin (Belfast S)
Wilshire, David


Soames, Hon Nicholas
Wolfson, Mark


Speed, Keith
Wood, Timothy


Speller, Tony
Woodcock, Mike


Spicer, Sir Jim (Dorset W)
Yeo, Tim


Spicer, Michael (S Worcs)
Young, Sir George (Acton)


Squire, Robin



Stanbrook, Ivor
Tellers for the Ayes:


Steel, Rt Hon David
Mr. Mark Lennox-Boyd and


Steen, Anthony
Mr. Peter Lloyd.


NOES


Abbott, Ms Diane
Caborn, Richard


Adams, Allen (Paisley N)
Callaghan, Jim


Allen, Graham
Campbell, Ron (Blyth Valley)


Archer, Rt Hon Peter
Campbell-Savours, D. N.


Armstrong, Hilary
Canavan, Dennis


Ashley, Rt Hon Jack
Clark, Dr David (S Shields)


Ashton, Joe
Clarke, Tom (Monklands W)


Banks, Tony (Newham NW)
Clay, Bob


Barnes, Harry (Derbyshire NE)
Clelland, David


Barron, Kevin
Clwyd, Mrs Ann


Battle, John
Cohen, Harry


Beckett, Margaret
Coleman, Donald


Bell, Stuart
Cook, Frank (Stockton N)


Benn, Rt Hon Tony
Cook, Robin (Livingston)


Bennett, A. F. (D'nt'n &amp; R'dish)
Corbyn, Jeremy


Bermingham, Gerald
Cousins, Jim


Bidwell, Sydney
Cox, Tom


Blair, Tony
Crowther, Stan


Boyes, Roland
Cryer, Bob


Bradley, Keith
Cummings, John


Bray, Dr Jeremy
Cunliffe, Lawrence


Brown, Gordon (D'mline E)
Cunningham, Dr John


Brown, Nicholas (Newcastle E)
Dalyell, Tam


Buchan, Norman
Darling, Alistair





Davies, Ron (Caerphilly)
McTaggart, Bob


Davis, Terry (B'ham Hodge H'I)
McWilliam, John


Dewar, Donald
Madden, Max


Dixon, Don
Mahon, Mrs Alice


Dobson, Frank
Marek, Dr John


Doran, Frank
Marshall, David (Shettleston)


Douglas, Dick
Marshall, Jim (Leicester S)


Duffy, A. E. P.
Martin, Michael J. (Springburn)


Dunnachie, Jimmy
Maxton, John


Eadie, Alexander
Meacher, Michael


Eastham, Ken
Michie, Bill (Sheffield Heeley)


Evans, John (St Helens N)
Millan, Rt Hon Bruce


Ewing, Harry (Falkirk E)
Mitchell, Austin (G't Grimsby)


Fatchett, Derek
Moonie, Dr Lewis


Faulds, Andrew
Morgan, Rhodri


Field, Frank (Birkenhead)
Morris, Rt Hon J. (Aberavon)


Fields, Terry (L'pool B G'n)
Mowlam, Marjorie


Fisher, Mark
Mullin, Chris


Flannery, Martin
Murphy, Paul


Flynn, Paul
Nellist, Dave


Foot, Rt Hon Michael
Oakes, Rt Hon Gordon


Foster, Derek
O'Neill, Martin


Foulkes, George
Orme, Rt Hon Stanley


Fraser, John
Parry, Robert


Galbraith, Sam
Patchett, Terry


Galloway, George
Pendry, Tom


Garrett, John (Norwich South)
Pike, Peter L.


George, Bruce
Prescott, John


Gilbert, Rt Hon Dr John
Primarolo, Dawn


Godman, Dr Norman A.
Quin, Ms Joyce


Golding, Mrs Llin
Randall, Stuart


Gordon, Mildred
Redmond, Martin


Gould, Bryan
Flees, Rt Hon Merlyn


Grant, Bernie (Tottenham)
Reid, Dr John


Griffiths, Nigel (Edinburgh S)
Richardson, Jo


Griffiths, Win (Bridgend)
Robertson, George


Grocott, Bruce
Robinson, Geoffrey


Hattersley, Rt Hon Roy
Rogers, Allan


Healey, Rt Hon Denis
Rooker, Jeff


Heffer, Eric S.
Ross, Ernie (Dundee W)


Henderson, Doug
Rowlands, Ted


Hinchliffe, David
Ruddock, Joan


Hogg, N. (C'nauld &amp; Kilsyth)
Sedgemore, Brian


Holland, Stuart
Sheerman, Barry


Home Robertson, John
Sheldon, Rt Hon Robert


Howarth, George (Knowsley N)
Shore, Rt Hon Peter


Howell, Rt Hon D. (S'heath)
Short, Clare


Hoyle, Doug
Skinner, Dennis


Hughes, John (Coventry NE)
Smith, Andrew (Oxford E)


Hughes, Robert (Aberdeen N)
Smith, C. (Isl'ton &amp; F'bury)


Hughes, Roy (Newport E)
Smith, Rt Hon J. (Monk'ds E)


Hughes, Sean (Knowsley S)
Snape, Peter


Illsley, Eric
Soley, Clive


Ingram, Adam
Stott, Roger


Janner, Greville
Strang, Gavin


John, Brynmor
Straw, Jack


Jones, Barry (Alyn &amp; Deeside)
Taylor, Mrs Ann (Dewsbury)


Kaufman, Rt Hon Gerald
Turner, Dennis


Kinnock, Rt Hon Neil
Wall, Pat


Leadbitter, Ted
Walley, Joan


Leighton, Ron
Wardell, Gareth (Gower)


Lestor, Joan (Eccles)
Wareing, Robert N.


Lewis, Terry
Welsh, Michael (Doncaster N)


Livingstone, Ken
Williams, Rt Hon Alan


Lloyd, Tony (Stretford)
Williams, Alan W. (Carm'then)


Lofthouse, Geoffrey
Wilson, Brian


McAllion, John
Winnick, David


McAvoy, Thomas
Wise, Mrs Audrey


McCartney, Ian
Worthington, Tony


Macdonald, Calum A.
Young, David (Bolton SE)


McFall, John



McKay, Allen (Barnsley West)
Tellers for the Noes:


McKelvey, William
Mr. Frank Haynes and


McLeish, Henry
Mr. Ray Powell.


McNamara, Kevin

Question accordingly agreed to.

Mr. Speaker: With the leave of the House, I shall put motions 36 to 49 together.

36. CAPITAL GAINS (MARRIED COUPLES)

Resolved,
That provision may be made about chargeable gains of husbands and wives.—[Mr. Lawson.]

37. CAPITAL GAINS (ANNUAL EXEMPT AMOUNT)

Resolved,
That provision may be made as to the operation of section 5 of the Capital Gains Tax Act 1979 for the year 1988–89.[Mr. Lawson.]

38. CAPITAL GAINS (DEPENDENT RELATIVE'S RESIDENCE)

Resolved,
That provision may be made removing the relief given by section 105 of the Capital Gains Tax Act 1979. —[Mr. Lawson.]

39. CAPITAL GAINS (INDEXATION)

Resolved,
That provision (including provision having retrospective effect) may be made removing indexation allowance in the case of shares in building societies and industrial and provident societies and of certain disposals by companies of shares or debts.—[Mr. Lawson.]

40. TRANSFERS WITHIN A GROUP

Resolved,
That provision may be made excluding certain cases from the operation of section 273 of the Income and Corporation Taxes Act 1970.—[Mr. Lawson.]

41. PERSONAL EQUITY PLANS

Resolved,
That provision may be made enabling regulations under section 149D of the Capital Gains Tax Act 1979 to secure, in relation to disposals on or after 18th January 1988, that losses are in certain circumstances disregarded for the purposes of capital gains tax.—[Mr. Lawson.]

42. INVESTMENT TRUSTS

Resolved,
That provision may be made amending the definition of "investment trust" in the Income and Corporation Taxes Act 1988 and treating section 93(6) of the Finance Act 1972 as not having been repealed.—[Mr. Lawson.]

43. ASSESSMENT PROCEDURE

Resolved,
That provision may be made about assessments relating to income arising in the year for which the assessments are made. —[Mr. Lawson.]

44. OIL ALLOWANCE

Resolved,
That provision may be made reducing the oil allowance under section 8 of the Oil Taxation Act 1975 in respect of certain oil fields.[Mr. Lawson.]

45. STAMP DUTY (ABOLITION OF CAPITAL DUTY)

Resolved,
That the following provisions shall have effect for the period beginning with 22nd March 1988 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—
(1) The stamp duties chargeable by virtue of section 47 of the Finance Act 1973 and Article 8 of the Finance (Miscellaneous Provisions) (Northern Ireland) Order 1973 (stamp duties on documents relating to chargeable transactions of capital companies) are abolished; and accordingly—


(a) that section, section 48 of that Act and Schedule 19 to that Act; and
(b) that Article, Article 9 of that Order and Schedule 2 to that Order,

shall cease to have effect.

(2) Paragraph (1) above shall have effect in relation to—

(a) any transaction occurring on or after 22nd March 1988;
(b) any transaction occurring on or after 16th March 1988 in respect of which the relevant document is not stamped before 22nd March 1988;
(c) any exempt transaction occurring before 22nd March 1988 in respect of which a relevant event occurs on or after 22nd March 1988; and
(d) any exempt transaction occurring before 16th March 1988 in respect of which a relevant event occurs on or after 16th March 1988 and the relevant duty is not paid before 22nd March 1988.

(3) For the purposes of section 14(4) of the Stamp Act 1891 (instruments not to be given in evidence etc. unless stamped in accordance with the law in force at the time of execution), the law in force—

(a) in a case falling within paragraph (2)(b) above, at the time of execution of the relevant document; or
(b) in a case falling within paragraph (2)(d) above, on the date on which the relevant event occurs,

shall be deemed to be that as varied in accordance with this Resolution.

(4) In this Resolution—
exempt transaction" means a transaction which is exempt by virtue of paragraph 10(1) of Schedule 19 to the Finance Act 1973.
relevant document" has the meaning given by section 47 of that Act;
relevant duty" means the duty payable under paragraph 10(4) of Schedule 19 to that Act;
relevant event" means such an event as is mentioned in paragraph 10(3)(a) or (b) of Schedule 19 to that Act;
and any reference in this paragraph to section 47 of or Schedule 19 to that Act includes a reference to Article 8 of or Schedule 2 to the Finance (Miscellaneous Provisions) (Northern Ireland) Order 1973.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973. —[Mr. Lawson.]

46. STAMP DUTY (ABOLITION OF UNIT TRUST INSTRUMENT DUTY)

Resolved,
That the following provisions shall have effect for the period beginning with 22nd March 1988 and ending 31 days after the earliest of the dates mentioned in section 50(2) of the Finance Act 1973—
(1) The stamp duty chargeable by virtue of the heading in Schedule 1 to the Stamp Act 1891 "Unit Trust Instrument" is abolished; and accordingly that heading and the following enactments, namely—

(a) section 53 of the Finance Act 1946;
(b) section 24 of the Finance (No. 2) Act (Northern Ireland) 1946;
(c) section 30 of the Finance Act 1962; and
(d) section 3 of the Finance Act (Northern Ireland) 1962,

shall cease to have effect.

(2) Paragraph (1) above shall have effect in relation to—

(a) any trust instrument executed on or after 22nd March 1988;
(b) any trust instrument executed on or after 16th March 1988 which is not stamped before 22nd March 1988;
(c) any property becoming trust property on or after 22nd March 1988; and
(d) any property becoming trust property on or after 16th March 1988 in respect of which the trust instrument is not stamped before 22nd March 1988.

(3) For the purposes of section 14(4) of the Stamp Act 1891 (instruments not to be given in evidence etc. unless stamped in accordance with the law in force at the time of execution), the law in force—

(a) at the time of execution of a trust instrument falling within paragraph (2)(b) above; or
(b) on the day on which property falling within

paragraph (2)(d) above becomes trust property, shall be deemed to be that as varied in accordance with this Resolution.

(4) In this Resolution "trust instrument" and "trust property" have the meanings given by section 57 of the Finance Act 1946 or section 28 of the Finance (No. 2) Act (Northern Ireland) 1946.
And it is hereby declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of section 50 of the Finance Act 1973.—[Mr. Lawson.]

47. STAMP DUTY (PAIRED SHARES)

Resolved,
That provision (including provision having retrospective effect) may be made with respect to stamp duty in cases where shares in a company incorporated in the United Kingdom and shares in a company not so incorporated may not be transferred except in units each comprising one share in each company.—[Mr. Lawson.]

48. STAMP DUTY RESERVE TAX

Resolved,
That charges to stamp duty reserve tax may be imposed by provisions (including provisions having retrospective effect) relating to that tax.—[Mr. Lawson.]

49. RELIEF FROM TAX (INCIDENTAL AND CONSEQUENTIAL CHARGES

Resolved,
That it is expedient to authorise any incidental or consequential charges to any duty or tax (including charges having retrospective effect) which may arise from provisions designed in general to afford relief from tax. — [Mr. Lawson.]

PROCEDURE (FURTHER TAXATION)

Resolved,
That, notwithstanding anything to the contrary in the practice of the House relating to matters which may be included in Finance Bills, any Finance Bill of the present Session may contain the following provisions taking effect in a future year—

(a) provisions about the taxation of persons who are or have been married,

(b)provisions about the application of Chapter I of Part VII of the Income and Corporation Taxes Act 1988 to individuals not resident in the United Kingdom,
(c)provisions about relief under section 259 of that Act,
(d)provisions reducing the percentages specified in sections 266(5)(a) and 274(3)(a) of, and paragraph 3(3)(a) of Schedule 14 to, that Act, and
(e)provisions amending the Taxes Management Act 1970.—[Mr. Lawson.]

FINANCE (NO. 2) BILL [MONEY]:

Queen's Recommendation having been signified—

Resolved,
That, for the purposes of .any Act resulting from the Finance (No. 2) Bill, it is expedient to authorise the making out of money provided by Parliament of payments to General Commissioners acting for divisions in Northern Ireland and payments to or in respect of clerks and assistant clerks to such Commissioners.—[Mr. Lawson.]

Ordered,
That a Bill be brought in upon the foregoing resolutions: And that the Chairman of Ways and Means, Mr. Chancellor of the Exchequer, Mr. Secretary Fowler, Mr. Secretary Ridley, Mr. Kenneth Clarke, 14r. John MacGregor, Mr. Secretary Channon, Mr. Secretary Parkinson, Mr. John Major, Mr. Norman Lamont, Mr. Peter Brooke and Mr. Peter Lilley do prepare and bring it in.

FINANCE (NO. 2) BILL

Mr. Norman Lamont accordingly presented a Bill to grant certain duties, to alter other duties, and to amend the law relating to the national debt and the public revenue, and to make further provision in connection with finance : And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 127.]

Mr. Harry Ewing: On a point of order, Mr. Speaker. You may not have noticed that just before you called the 10 o'clock Division there was without a shadow of a doubt physical violence inflicted by the Patronage Secretary and the Leader of the House on the Chancellor of the Exchequer. I have not seen such violence in the House since the night on which the right hon. Member for Henley (Mr. Heseltine) ran about with the Mace, threatening to batter everyone over the head. Surely you have some obligation to control these Tory hooligans — [interruption.]—once and for all.

Mr. Speaker: I have sympathy with the Patronage Secretary for what he had to do.

Education Reform [Money] (No. 3)

Queen's Recommendation have been signified—

Motion made, and Question proposed,
That, for the purposes of any Act resulting from the Education Reform Bill, it is expedient to authorise the payment out of money provided by Parliament of any sums required by the Secretary of State for making grants to promote learning or research or in respect of expenditure incurred or to be incurred for educational purposes. —[Mrs. Rumbold.]

Mr. Derek Fatchett: That was a very strange way to move an important money resolution. The Minister only just managed to get to the Dispatch Box.
The House is owed some explanation of why the money resolution is before us. This is the third money resolution for the Education Reform Bill. We had one in December to coincide with the Bill's Second Reading. We had another when the Government decided to abolish the Inner London education authority, and we have a third today. None of the resolutions has bought one additional penny to be spent on the education service. There seems to be an inverse relationship—more money resolutions, less money to be spent by the Secretary of State for Education and Science.
One gets the impression that the Bill grows and grows and it is probably appropriate that we should have a third money resolution simply because of that. When the Bill was read a Second time, it contained 147 clauses. There are an additional 39 clauses with the promise of further Government new clauses on Report over the next few days.

Mr. Christopher Hawkins: I know that the hon. Gentleman is very diligent. Has he looked at the notices of amendments tabled for tomorrow? I am sure that he has. He will have noted that the Government new clause 41 is in the name of my right hon. Friend the Secretary of State for Education and Science. New clause 42 is in the name of Mr. Stanley Baker. Is it in order for dead film stars to table Government new clauses?

Mr. Fatchett: I cannot say whether that is valid. However, I fear that we may well have a dead Education Secretary if all the recent divisions between Downing street and Elizabeth house are anything to go by.
One gains the impression that the Secretary of State is trying to ensure that even if he does not produce the most significant education Bill of all time, he at least produces the longest. He is also trying to ensure that he gets everything down on paper before he moves on to some other office or out of office altogether.
It would have been appropriate for the Minister of State to give us some explanation of the money resolution.

The Secretary of State for Education and Science (Mr. Kenneth Baker): Because the hon. Gentleman's speech would have been easier.

Mr. Fatchett: Certainly, but clearly the Government have abrogated all responsibility in these matters. It is a mistake to pretend that this is a clever tactic. The Minister had a full and attentive House, waiting to find out the reason for the resolution.
There are two possible explanations. The first, I suspect, was in the Minister's brief, as we would have heard if she had had the audacity to present it to the House. The second reason, I suggest, was the real agenda

behind the resolution. The first possible explanation is that new clauses 44 to 47, tabled for tomorrow, involve grants and expenditure. They would not be anything other than ultra vires if the money resolution had not been agreed tonight. So the official explanation is that the new clauses needed the resolution to be passed.
The wording of the resolution offers another explanation. It is a catch-all resolution. Having failed to get it right on two previous occasions, the Government have decided that an open resolution will not involve their returning later with yet another failed attempt to get it right. The Minister could not give us that explanation, so she will probably talk about new clauses 44 to 47.
Perhaps the Minister will have the courtesy to reply to one or two questions. New clause 44 increases to 100 per cent. the amount of grant to go to local authorities to cover student awards. What is the reason for that change? Some of my hon. Friends say that this is a paving measure to enable the Government to move to student loans some time in the next 12 or 18 months—if the Secretary of State ever finds more time for legislation. What is the purpose behind new clause 44?
New clause 44 is typical of the Bill and of the way in which the Secretary of State has managed it through its parliamentary proceedings. Yet again, the resolution involves no financial costings and does not give detailed figures of what the Bill will cost. It does not explain how it will be implemented, what it will mean for teachers, or how the national curriculum will be delivered.
Why are there no costings for the national curriculum? Why has the Secretary of State given no figures? In reply to the hon. Member for Yeovil (Mr. Ashdown) last Tuesday, the Secretary of State said that it would be later this year, and possibly up to 12 months, before there would be any signs of the cost and delivery of the national curriculum. What a state for the Government to be in, 12 months after they told the country that they had a national curriculum ready to be delivered to our children and schools. In the election, the Secretary of State sold a false prospectus, and has still given us no sign of how he will deliver the national curriculum.
We also know of certain local difficulties between the Prime Minister and the Secretary of State over testing. The Secretary of State believes we should have the differentiated diagnostic approach set out in the Black committee report, whereas the Prime Minister believes in simple pass-fail tests. She is also concerned that the Black report will be costly to implement. I do not know how she comes to that conclusion, because the Secretary of State —in character—has never provided any figures of how much he expects assessment to cost.
If we are to be able to make a judgment between the Secretary of State and the Prime Minister, it might be useful—it might have happened in the resolution—if the Secretary of State could provide some figures showing the cost of assessment. We are keen to support the Secretary of State as, on this issue, we believe that he is right in his support for the Black report.
It would be helpful to us if the Secretary of State could tell us how much he will make available for assessment and testing in the manner advocated by the Black report. How can he find friends if he does not provide that information? I know that he is desperately seeking friends, but if he wants to win the argument and show the Conservative party and the electorate that he has the courage to stand up to the Prime Minister, he should give us the figures so


that we can base our arguments and support on some concrete evidence. All we can do at the moment is recognise that the Secretary of State's intuition, the learning of the Black report and all good education practice point in one direction and that the Prime Minister, yet again, points in another.
City technology colleges may also be covered by this catch-all resolution. Two years ago, the Secretary of State told the Conservative party conference that there would be a network of CTCs by the autumn of 1989. Each of the new model Baker schools—all 20 of them—were to be supported by private money. Private enterprise would put up a substantial part of the capital. That was the policy. It was to be a new partnership between British industry and the Secretary of State.
There are rumours that the Secretary of State has gone from firm to firm looking for sponsors, but all he has found is the door, because every industrialist has said that the state education system is preferable to the Baker model schools. With great desperation, he is now going around trying to tempt more and more industrialists, but with less and less success. It is yet another scheme from the man who brought the poll tax to the country. He has failed with CTCs but, in desperation, he is changing their nature. They were to be private enterprise schools. They were supported and cheered at the Conservative party conference because of it. They were a breakthrough. No longer are they private enterprise or even privatised schools. They are now nationalised schools. They are to be a new type of Secretary of State-controlled school, with the money coming from the Treasury.
In Nottingham, 80 per cent, of the capital cost is being met by the Treasury. That figure, on account of the money resolution, could increase to 100 per cent., because there is no control over how much will be spent or how it will be spent. The Government have failed with CTCs and are now looking for a way in which to introduce their nationalised schools.

Mr. Graham Allen: Conservative Members appear to have been struck dumb in defence of the resolution. Although 80 per cent. of the capital cost was apparently to be provided for CTCs, in Nottingham, where a CTC is being imposed, the Government are prepared to put three times as much money into one CTC as into the capital programme for 556 schools in the whole of Nottinghamshire. That sum has proved not to be enough. Does my hon. Friend agree that 85 per cent. of the capital cost will be met by the Treasury? Does he expect that figure to go even higher because private interest in CTCs is even less than the Secretary of State projected?

Mr. Fatchett: My hon. Friend makes a valid point. He was right to say that the Government are prepared to spend much more capital on the CTCs than on the whole of the Nottinghamshire education system. He was also right to say that the Government are desperately looking for sponsors to get the CTCs off the ground.
This is a catch-all money resolution which will allow the Government to spend as they wish, although they do not know how they will spend because they have failed to do their homework on the Bill. The House is owed an explanation of the money resolution from the Minister of State. She has treated the House with contempt by not offering one.

Mr. Andrew F. Bennett: She has chickened out.

Mr. Fatchett: Yes, and I shall come to that point in a moment.
It is without precedent to have three money resolutions for one Bill. It must also be without precedent for the Minister, on the third occasion, not to have the courtesy to explain why the Government have had to bring to the House another money resolution. There were times in Committee when the Minister's performance was an embarrassment to the Secretary of State, but it is taking that too far for the Secretary o r State to silence her tonight. She owes us the courtesy of replying to the points raised——

Mr. Martin Flannery: My hon. Friend may recall that in Committee I said that the assisted places scheme was running wild. One school with 1,200 pupils has 459 with grants of at least £2,000 each. That school is receiving almost: £1 million of public money for private education. With 126 more schools joining the gravy train, the figures involved are enormous. The Government have not fully understood the money that they will have to pay out on that and other schemes. [Interruption.]

Mr. Fatchett: The Under-Secretary makes his usual sedentary comments, to which we became accustomed in Committee. My hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery) made a valid point about the assisted places scheme. It was only last Tuesday, during Question Time, that I said that £4,000 per year would be paid for some places on the scheme, yet just over £2,000 a year is considered to be overspending on our children who are educated in ILEA schools. That sort of double standard and hypocrisy is typical of this Government.
To conclude——

Mr. Nicholas Bennett: Good.

Mr. Fatchett: The hon. Gentleman makes all sorts of noises. I am trying to explain to him what the Minister has singularly failed to explain. I should be sorely disappointed if I allowed the usually vacuous head of the hon. Gentleman to remain such on this occasion. I have attempted to provide him with some information, and I hope that the Minister will reinforce what I have said.
We shall divide the House on the money resolution because it gives the Government absolute power with no accountability and no responsibility, and because there has been no preparation for how the money will be spent.

Sir Peter Emery: I shall be brief at this late hour, but I cannot begin my speech without first rejecting absolutely the remarks made by the Opposition Front-Bench spokesman when he tried to say that the Secretary of State has sold the country a false prospectus. That is most unfair and wrong and, what is more, it will be seen as a typical statement from the Opposition, when they do not understand how much the Bill will be welcomed by parents and by those who want I o see the level of education raised in this country.
Secondly, it is worth pointing out that this money resolution, about which the Opposition are making so much fuss, has been introduced because they wanted it. It is to meet what they had requested.
My hon. Friend the Minister of State will see that the money resolution authorises the payment of sums
for making grants to promote learning or research".
I am concerned that the amount of space research that has been taking place at an academic level has declined, is declining and must be reversed. As a great deal more research into space is carried out in Europe, will my hon. Friend ensure that her right hon. Friend the Secretary of State, in dealing with money under this resolution, will look again at the areas in which research can be dealt with, in the hope that we might be able to reverse the loss of money into research that we have seen from the Department of Trade and Industry, and that we might be able to have further increases from the academic side? Will she request her right hon. Friend to consider that matter when the Bill has passed into an Act?

Mr. Paddy Ashdown: The hon. Member for Honiton (Sir P. Emery) told us that the Bill was popular. I wish that he would allow his prejudice to be embellished by a few facts. All the evidence that is available to us, both in the latest opinion polls and in individual soundings of parents up and down the country, shows quite the contrary. Indeed, as the Secretary of State has gone on to explain his Bill in more detail, the weight of opinion against it has increased and strengthened. The latest opinion polls, which I read over the past weekend, showed that a mere 29 per cent. of the people of Britain would now be inclined to vote Conservative because of the Bill, rather than 45 per cent. who would be less inclined——

Sir Peter Emery: It is 46 per cent.

Mr. Geoffrey Dickens: It is 46 per cent.

Mr. Ashdown: —rather than the 46 per cent. who would be less inclined to vote for the Conservative party because of the Bill. Under those circumstances it is absolute nonsense for the hon. Member for Honiton to decide that that means that the public support the Bill.

Sir Peter Emery: Would the hon. Gentleman like me to reply?

Mr. Ashdown: If the hon. Gentleman wishes to on this point.

Sir Peter Emery: I thank the hon. Gentleman for giving way. The recent public opinion polls show complete support for the Government. There is no decline in support for the Government. The only decline seems to be for some Opposition party which seems to have the support of only 6 per cent. of the public at the moment.

Mr. Ashdown: Time will tell—[Interruption.]—just as it has told on the Government, as their proposals have become more broadly known. As there has been more discussion, public opinion in support of the so-called Education Reform Bill has got less and less.
If one opposes a Bill as strenously as we oppose this, there are always very good reasons for opposing the money resolution also. If one opposes the ends, one must oppose the means. So it is not surprising that we oppose the money resolution.
But there are stronger reasons than for the average case. This resolution is not only bad, but dangerous in two

areas. First as the hon. Member for Leeds, Central (Mr. Fatchett) said, it gives the Secretary of State a blank cheque. Having come twice to the House previously with amendments to this ill-thought-out, hastily constructed Bill, asking for approval to spend more money, on this third occasion the Government come, not with a specific proposal, but seeking an open-ended commitment that will allow them to raise more money for whatever changes they may have to make. Once again, the Secretary of State's powers have been increased in general and in particular.
The Government have not thought the Bill out. Certainly, those of us who have sat through the Committee proceedings from beginning to end realise that time and again, even the Secretary of State has not been aware of the detailed implications of individual provisions, let alone thought them through, so powerful is the rule of dogma over practicalities.
Secondly, we understand the special circumstances in which the Secretary of State finds himself. Not only must he change the Bill today and, as the resolution shows, in future, because he has not thought it through, but, under the resolution, he will be forced to make changes because of pressures from the Prime Minister and the Conservative Right wing. That has happened in the past and the request for this blank cheque is a clear sign that that is what the Secretary of State expects to happen in future.
I oppose the wording of the resolution because it gives that power to the Secretary of State and points up his inefficiency in sorting out the details of the Bill. It is a sign that he will have to give in to the lobbying forces which are already working on him.
There is an even more worrying reason to oppose the money resolution. I suspect that the Government want to introduce a resolution now because of new clause 47. Today I rang the Department and others to discover why that new clause was being introduced. It alters section 100 of the Education Act 1944. It allows the Secretary of State to grant
persons other than local education authorities…grants in respect of expenditure incurred or to be incurred for the purposes of educational services provided by them.
It subtly but importantly changes that wording so that the Secretary of State may provide grants under new clause 47 on the basis of this money resolution, not just in respect of educational services which are provided by non-LEA authorities, but "for the purposes of" or "in connection with" that service. Those new words are added.
The reason is undoubtedly that with those grants the Government are seeking to fund not just the bodies providing education, but those providing research, monitoring or other services to education providers—in other words, the bodies which the Prime Minister has told us she would like to see established to advise opting-out schools; anybody whom the Secretary of State may wish to provide a public grant for; anybody to monitor the operation of those providing education services; or anybody to advise and provide research. New clause 47 provides the Secretary of State with the mechanism to fund the Government's friends to do what the Government want. For instance, under the provision, there is no reason why it should not be possible to grant-aid to Mr. Stewart Sexton's nursery school for technology.
I caution the Government. Conservative Members should seriously consider whether this is the way in which they would like to go. The provisions in new clause 47, which will be enabled by the money resolution, will allow


a future Government or the present Government to do right across the country what the GLC has done for London schools. The GLC has funded racial monitoring organisations. New clause 47 will allow a future Labour Government to do that not only for a confined area but right across Britain.
Once again, the Secretary of State is taking an extension of powers that he says that he will not use in such a way. But the House should be under no misunderstanding. Such powers will exist and will be used in that fashion in future. That cannot be a wise extension of the Secretary of State's powers. That cannot be a sensible way in which to legislate. That cannot be a reasonable way to provide money for the Government to distort and damage our future education system. Those two reasons are related to handing to the Secretary of State power that he should not have, that a Labour Secretary of State should not have, and, indeed, that a Democrat Secretary of State should not have. They are unconstitutional and undemocratic powers. For that reason, we shall vote against them.

Mr. Bob Cryer: It is interesting that the hon. Member for Honiton (Sir P. Emery), having exhausted the possibility of obtaining money from the Manpower Services Commission for diving, now appears to be examining the powers of the public purse in space. At least it is part of the enterprise culture.
It was extraordinary that the Minister did not deign to give the House any explanation. That is typical of the elective and arrogant dictatorship that the Government have become. Ministers negligently relax on the Government Front Bench and hardly open their mouths to give the House an explanation of a resolution that, as has been pointed out on several occasions, gives sweeping powers to the Secretary of State. The House of Commons is owed an explanation. The House of Commons is supposed to be the body that conducts an examination of expenditure. It is supposed to be the body to which the Government are accountable. But the Under-Secretary of State can hardly stifle his yawns at the thought of some sort of democratic accountability. That is why we are here today.
The Opposition, having looked at it, know what the money resolution is about. That is the Opposition's duty. I expect that Conservative Members are a little alarmed that the Secretary of State is taking such wide powers to grant money for virtually any purpose that has even a vague connection with education.
For example, will it be possible for the Secretary of State to use the resolution to provide money for the urgent purpose of extending the Queensbury middle school in my constituency? There is not enough playground area. The local authority is supposed to provide 400 places in a school that is designed for 200 children. There are about four temporary classrooms.
Is that the sort of standard that the Education Secretary wants to maintain? Will he use some of the money that is authorised by the resolution for the relief of that sort of thing, or will he squander it on the foolish notions that he has encompassed in the Education Reform Bill? As he knows, the Bill will increase divisions in our society and, time after time, lead to a repetition of the Dewsbury situation, when money will be lavished on an opting-out scheme.
Will the right hon. Gentleman do something sensible, such as spend money on schools in Bradford? As he knows, unlike schools in most major cities, Bradford schools are in a predicament because there is expanding school roll. Many schools are hardly wind and watertight. The local education authority is hard-pressed to spend sufficient money to keep them wind and watertight.
In Wibsey, in my constituency, there is another school in which most of the playing areas are taken up by temporary classroom accommodation. When I, as the Member of Parliament, have raised this matter, I have been told by the local education authority that it does not have the money to build the new wing that is so much needed. Is this resolution to be used to provide money for such purposes, or is it to be squandered on this GERBIL?
Because the resolution is so widely cast, I would like to ask the Minister a few questions. She no doubt has a copy of the booklet produced by the Department of Employment and the MSC on the Settle-to-Carlisle corridor. The railway is an important asset that many of us want to see retained and developed, and the booklet covers recreational, environmental, heritage, arts and crafts purposes.
All those could be considered as educational purposes. This may sound strange, but the resolution is so widely cast that it could be argued that it could empower the Secretary of State to spend money on the Settle to Carlisle railway. I want to see money spent on the railway, but it should come from the Department of Transport or from the Department of Employment. The terms of the resolution are so wide that there is no impediment to the Secretary of State for Education spending money on this.
The House of Commons should express a severe criticism of a resolution that is cast in such wide terms. I understand that a number of amendments have been tabled in Committee, but this is not a Committee of the whole House. The Bill is being examined in a Committee upstairs, so the Minister has a duty to give an explanation to the whole House.
The members of the Committee may understand why the Secretary of State has been so ham-fisted. He is fighting his way through to being a hard Right-winger, when he had so many years as a Heathite, and he used to criticise the Prime Minister, saying that the Tory party was like a bird—it had a Right wing and a Left wing, but the intelligence was in the centre. For many years, people thought that he was not going to make it to a Tory Cabinet, but he is in there now, and he is having to confront his conscience in carrying out all these Right-wing, extremist measures. He may be a bit confused, and, as a result of his confusion in Committee, he has to keep on producing money resolutions. The GERBIL is being changed week after week because from the start it has been carried out in a ham-fisted way.
We are owed an explanation. The debate can go on for another 10 minutes, and in that time, the Minister should give us an explanation of what all this is about. As you know, Mr. Deputy Speaker, I frequently talk about money resolutions, so it is pleasing that the Secretary of State seems to be getting into a habit—

Mr. Dickens: Will the hon. Gentleman give way?

Mr. Cryer: No, I will not. I want to give the Minister time to give the explanation that should have been given at the beginning, and which, had it been given, would have short-circuited the debate.

The Minister of State, Department of Education and Science (Mrs. Angela Rumbold): I am sorry that so many hon. Gentlemen seem to have read so many interesting books over the weekend, because they have managed to interpret in a strange way these four new clauses, which provide my right hon. Friend the Secretary of State with grant-making powers, to be amended where necessary to take account of changed circumstances and need.
There is no great sinister motive in this. The resolution is required to enable these four helpful clauses to carry funding with them. I hope that when I go on to explain the meaning of each of these clauses, hon. Gentlemen will want the funding to go with them. We would have regarded it as a great shame if the money resolution had not been moved. Such is the excitement that has been engendered by this proposal that I was nervous that I might not be able to rise to explain it.
I am grateful to my hon. Friend the Member for Honiton (Sir P. Emery), whose remarks were the most sensible that we heard this evening, for what he said. The research grants, which total about £30 million of Government money, are used for the purposes of which he spoke. When I deal with the point about grant-making for educational purposes, he will understand that his suggestion would not lie happily in the new clauses.

Mr. Fatchett: It might be helpful if the Minister would explain to us, alongside the four new clauses, why the money resolution includes the words,
expenditure incurred or to be incurred for educational purposes.
That goes way beyond the four new clauses.

Mrs. Rumbold: If I am allowed to speak, I shall try to explain exactly what it is about.
New clause 44 deals with grants for local education authorities to cover the costs of mandatory grants and awards. Local education authorities in England and Wales have a duty under section 1(1) of the Education Act 1962 to provide awards to students on designated courses of higher education. Awards are paid under regulations which prescribe the detailed arrangements, including eligibility for awards and award rates. Authorities have very limited discretion. That has always been recognised in the reimbursement of 90 per cent. of their expenditure on awards through a grant from central Government. In addition, 10 per cent. of expenditure met by authorities is recognised in the assessment of their needs for rate support grant.
The hon. Member for Leeds, Central (Mr. Fatchett) will be aware that a new system of local government finance will be introduced from 1990. The 90 per cent. grant on awards expenditure and allowance in the needs assessment for the residue will be equivalent to a 100 per cent. rate of grant on mandatory awards. We propose to simplify the arrangements by increasing the rate of grant on mandatory awards to 100 per cent., with a corresponding reduction in Exchequer support to authorities through general grant. The intention is that the change should come into effect on 1 April 1990, and I commend that to the House.
New clause 45 deals with the problem of grants for the education of travellers and displaced persons. It empowers my right hon. Friend to make regulations providing for grant to be paid to local education authorities to help to

meet the costs of educating travellers and refugees. Considerable effort is needed on the part of a local education authority to provide education for traveller and refugee children and to secure their regular attendance at school. The costs cannot adequately be reflected in block grant arrangements, and at present they are met through a pooling system among local authorities.
However, pooling will not be appropriate in the new system of local government finance set out in the Local Government Finance Bill. It is necessary to provide a specific grant. Detailed arrangements for the grant will be prescribed in the regulations. The costs falling on the Exchequer under the new arrangements are expected to be substantially the same as now, and again I commend this to the House.

Mr. Ian Gow: Before my hon. Friend leaves the subject of travellers, can she tell the House whether she has received from my right hon. Friend the Member for Old Bexley and Sidcup (Mr. Heath) a message of support for this money resolution?

Mrs. Rumbold: I am indebted to my hon. Friend the Member for Eastbourne (Mr. Gow), but, sadly, I must say that I have received no such message. No doubt it awaits us.
New clause 46 deals with aided or special agreement schools. It will enable my right hon. Friend to pay grant to the governors of an existing voluntary aided school, or to the promoters of a new one, in respect of their expenditure on preliminary planning and design work on building projects. Building work at aided schools is eligible for 85 per cent. grant from the Department, but the resources available to my right hon. Friend for such expenditure, as for capital work generally, are limited. It is often the case that the proposals put to him for such work are based on inadequate estimates of cost, and at present he has no power to pay grant in respect of design work.
The idea of this grant is to enable the governing bodies of such schools to have better and more informed decisions to put to my right hon. Friend. Therefore, he proposes to provide grants for design work so that those plans will not prove abortive in the future.
Clause 47 redefines and clarifies the powers of the Secretary of State to pay grants to persons and bodies other than local education authorities whose activities or objects are in the fields of education, learning or research. As the hon. Member for Yeovil (Mr. Ashdown) rightly said, the clause amends and adds to the existing provision in section 100(1)(b) of the Education Act 1944. That provision is restricted to the payment of grants for expenditure for the purposes of educational services provided by the body receiving grant, or on its behalf, or under its management.
There are two elements in the new clause. Subsections (1) and (2) enable the Secretary of State to pay grant to bodies whose main purpose is the promotion of learning or research. That applies to bodies such as the British Academy and the Royal Society, and clarifies the Secretary of State's power to pay grant towards their general running expenses as well as their more specifically educational activities.
Subsection (3) redefines the group of bodies other than local education authorities that can be grant-aided and the activities for which grants can be paid—

It being three quarters of an hour after the commencement of proceedings on the motion, MR. DEPUTY SPEAKER put the Question, pursuant to Standing Order No. 14 (Exempted Business).

The House divided: Ayes 296, Noes 158.

Division No. 223]
[12.06 am


AYES


Aitken, Jonathan
Eggar, Tim


Alexander, Richard
Emery, Sir Peter


Alison, Rt Hon Michael
Evans, David (Welwyn Hatf'd)


Allason, Rupert
Evennett, David


Amess, David
Fairbairn, Nicholas


Amos, Alan
Fallon, Michael


Arbuthnot, James
Farr, Sir John


Arnold, Jacques (Gravesham)
Favell, Tony


Arnold, Tom (Hazel Grove)
Fenner, Dame Peggy


Ashby, David
Field, Barry (Isle of Wight)


Aspinwall, Jack
Forman, Nigel


Atkins, Robert
Forsyth, Michael (Stirling)


Baker, Rt Hon K. (Mole Valley)
Forth, Eric


Baker, Nicholas (Dorset N)
Fowler, Rt Hon Norman


Baldry, Tony
Franks, Cecil


Banks, Robert (Harrogate)
Freeman, Roger


Batiste, Spencer
French, Douglas


Bellingham, Henry
Fry, Peter


Bendall, Vivian
Gale, Roger


Bennett, Nicholas (Pembroke)
Gardiner, George


Bevan, David Gilroy
Garel-Jones, Tristan


Biffen, Rt Hon John
Gill, Christopher


Blackburn, Dr John G.
Goodlad, Alastair


Blaker, Rt Hon Sir Peter
Goodson-Wickes, Dr Charles


Bonsor, Sir Nicholas
Gorst, John


Bottomley, Peter
Gow, Ian


Bottomley, Mrs Virginia
Gower, Sir Raymond


Bowden, A (Brighton K'pto'n)
Grant, Sir Anthony (CambsSW)


Bowden, Gerald (Dulwich)
Greenway, Harry (Ealing N)


Bowis, John
Greenway, John (Ryedale)


Boyson, Rt Hon Dr Sir Rhodes
Gregory, Conal


Brandon-Bravo, Martin
Griffiths, Sir Eldon (Bury St E')


Brazier, Julian
Griffiths, Peter (Portsmouth N)


Bright, Graham
Grist, Ian


Brittan, Rt Hon Leon
Ground, Patrick


Brooke, Rt Hon Peter
Hamilton, Hon Archie (Epsom)


Brown, Michael (Brigg &amp; Cl't's)
Hamilton, Neil (Tatton)


Bruce, Ian (Dorset South)
Hampson, Dr Keith


Buchanan-Smith, Rt Hon Alick
Hanley, Jeremy


Budgen, Nicholas
Hannam, John


Burns, Simon
Hargreaves, A. (B'ham H'll Gr')


Burt, Alistair
Hargreaves, Ken (Hyndburn)


Butcher, John
Harris, David


Butler, Chris
Hawkins, Christopher


Carlisle, John, (Luton N)
Hayes, Jerry


Carlisle, Kenneth (Lincoln)
Hayhoe, Rt Hon Sir Barney


Carrington, Matthew
Hayward, Robert


Carttiss, Michael
Heathcoat-Amory, David


Cash, William
Heddle, John


Chapman, Sydney
Heseltine, Rt Hon Michael


Chope, Christopher
Hicks, Mrs Maureen (Wolv' NE)


Churchill, Mr
Hind, Kenneth


Clark, Hon Alan (Plym'th S'n)
Holt, Richard


Clark, Dr Michael (Rochford)
Hordern, Sir Peter


Clarke, Rt Hon K. (Rushcliffe)
Howard, Michael


Colvin, Michael
Howarth, Alan (Strat'd-on-A)


Conway, Derek
Howarth, G. (Cannock &amp; B'wd)


Coombs, Anthony (Wyre F'rest)
Howell, Ralph (North Norfolk)


Coombs, Simon (Swindon)
Hughes, Robert G. (Harrow W)


Cope, John
Hunt, David (Wirral W)


Cran, James
Hunt, John (Ravensbourne)


Currie, Mrs Edwina
Hunter, Andrew


Davies, Q. (Stamf'd &amp; Spald'g)
Hurd, Rt Hon Douglas


Davis, David (Boothferry)
Irvine, Michael


Day, Stephen
Jack, Michael


Devlin, Tim
Jackson, Robert


Dickens, Geoffrey
Janman, Tim


Dorrell, Stephen
Jessel, Toby


Douglas-Hamilton, Lord James
Johnson Smith, Sir Geoffrey


Dover, Den
Jones, Gwilym (Cardiff N)


Dunn, Bob
Jones, Robert B (Herts W)





Jopling, Rt Hon Michael
Redwood, John


Kellett-Bowman, Dame Elaine
Renton, Tim


King, Roger (B'ham N'thfield)
Rhodes James, Robert


Kirkhope, Timothy
Riddick, Graham


Knapman, Roger
Ridley, Rt Hon Nicholas


Knight, Greg (Derby North)
Ridsdale, Sir Julian


Knight, Dame Jill (Edgbaston)
Roberts, Wyn (Conwy)


Knowles, Michael
Roe, Mrs Marion


Knox, David
Rossi, Sir Hugh


Lamont, Rt Hon Norman
Rost, Peter


Lang, Ian
Rowe, Andrew


Latham, Michael
Rumbold, Mrs Angela


Lawrence, Ivan
Ryder, Richard


Lee, John (Pendle)
Sackville, Hon Tom


Leigh, Edward (Gainsbor'gh)
Sayeed, Jonathan


Lennox-Boyd, Hon Mark
Scott, Nicholas


Lester, Jim (Broxtowe)
Shaw, David (Dover)


Lightbown, David
Shaw, Sir Giles (Pudsey)


Lilley, Peter
Shaw, Sir Michael (Scarb')


Lloyd, Sir Ian (Havant)
Shelton, William (Streatham)


Lloyd, Peter (Fareham)
Shephard, Mrs G. (Norfolk SW)


Lord, Michael
Shepherd, Colin (Hereford)


Luce, Rt Hon Richard
Shepherd, Richard (Aldridge)


Lyell, Sir Nicholas
Sims, Roger


McCrindle, Robert
Skeet, Sir Trevor


Macfarlane, Sir Neil
Smith, Tim (Beaconsfield)


MacKay, Andrew (E Berkshire)
Soames, Hon Nicholas


Maclean, David
Speed, Keith


McLoughlin, Patrick
Speller, Tony


McNair-Wilson, P. (New Forest)
Spicer, Sir Jim (Dorset W)


Madel, David
Spicer, Michael (S Worcs)


Major, Rt Hon John
Stanbrook, Ivor


Malins, Humfrey
Steen, Anthony


Mans, Keith
Stern, Michael


Maples, John
Stevens, Lewis


Marland, Paul
Stewart, Allan (Eastwood)


Marshall, John (Hendon S)
Stewart, Andy (Sherwood}


Marshall, Michael (Arundel)
Stewart, Ian (Hertfordshire N)


Martin, David (Portsmouth S)
Stradling Thomas, Sir John


Mates, Michael
Sumberg, David


Maude, Hon Francis
Tapsell, Sir Peter


Maxwell-Hyslop, Robin
Taylor, Ian (Esher)


Mellor, David
Taylor, John M (Solihull)


Meyer, Sir Anthony
Tebbit, Rt Hon Norman


Miller, Hal
Temple-Morris, Peter


Mills, Iain
Thompson, D. (Calder Valley)


Mitchell, Andrew (Gedling)
Thompson, Patrick (Norwich N)


Mitchell, David (Hants NW)
Thorne, Neil


Moate, Roger
Thornton, Malcolm


Monro, Sir Hector
Thurnham, Peter


Montgomery, Sir Fergus
Townsend, Cyril D. (B'heath)


Moore, Rt Hon John
Tracey, Richard


Morris, M (N'hampton S)
Tredinnick, David


Morrison, Hon Sir Charles
Trippier, David


Moss, Malcolm
Trotter, Neville


Moynihan, Hon Colin
Twinn, Dr Ian


Neale, Gerrard
Waddington, Rt Hon David


Needham, Richard
Wakeham, Rt Hon John


Nelson, Anthony
Waldegrave, Hon William


Neubert, Michael
Walden, George


Newton, Rt Hon Tony
Waller, Gary


Nicholson, David (Taunton)
Ward, John


Nicholson, Emma (Devon West)
Wardle, Charles (Bexhill)


Onslow, Rt Hon Cranley
Warren, Kenneth


Oppenheim, Phillip
Watts, John


Page, Richard
Wheeler, John


Paice, James
Whitney, Ray


Patnick, Irvine
Widdecombe, Ann


Patten, John (Oxford W)
Wilkinson, John


Pattie, Rt Hon Sir Geoffrey
Wilshire, David


Pawsey, James
Wolfson, Mark


Peacock, Mrs Elizabeth
Wood, Timothy


Porter, Barry (Wirral S)
Woodcock, Mike


Porter, David (Waveney)
Yeo, Tim


Portillo, Michael
Young, Sir George (Acton)


Price, Sir David



Raffan, Keith
Tellers for the Ayes:


Raison, Rt Hon Timothy
Mr. Robert Boscawen and


Rathbone, Tim
Mr. Tony Durant.






NOES


Adams, Allen (Paisley N)
George, Bruce


Allen, Graham
Godman, Dr Norman A.


Archer, Rt Hon Peter
Golding, Mrs Llin


Armstrong, Hilary
Gordon, Mildred


Ashdown, Paddy
Griffiths, Nigel (Edinburgh S)


Ashton, Joe
Griffiths, Win (Bridgend)


Barnes, Harry (Derbyshire NE)
Henderson, Doug


Barron, Kevin
Hinchliffe, David


Battle, John
Hogg, N. (C'nauld &amp; Kilsyth)


Beith, A. J.
Holland, Stuart


Bell, Stuart
Home Robertson, John


Benn, Rt Hon Tony
Howarth, George (Knowsley N)


Bennett, A. F. (D'nt'n &amp; R'dish)
Howells, Geraint


Boyes, Roland
Hoyle, Doug


Bradley, Keith
Hughes, John (Coventry NE)


Bray, Dr Jeremy
Hughes, Robert (Aberdeen N)


Brown, Gordon (D'mline E)
Hughes, Sean (Knowsley S)


Brown, Nicholas (Newcastle E)
Hughes, Simon (Southwark)


Bruce, Malcolm (Gordon)
Illsley, Eric


Caborn, Richard
Ingram, Adam


Callaghan, Jim
Jones, leuan (Ynys Môn)


Campbell, Menzies (Fife NE)
Kinnock, Rt Hon Neil


Campbell, Ron (Blyth Valley)
Kirkwood, Archy


Campbell-Savours, D. N.
Leadbitter, Ted


Carlile, Alex (Mont'g)
Lestor, Joan (Eccles)


Clarke, Tom (Monklands W)
Lewis, Terry


Clay, Bob
Livsey, Richard


Clelland, David
Lloyd, Tony (Stretford)


Clwyd, Mrs Ann
McAllion, John


Cohen, Harry
McAvoy, Thomas


Cook, Frank (Stockton N)
McCartney, Ian


Cook, Robin (Livingston)
Macdonald, Calum A.


Corbyn, Jeremy
McFall, John


Cousins, Jim
McGrady, Eddie


Cox, Tom
McKay, Allen (Barnsley West)


Crowther, Stan
McKelvey, William


Cryer, Bob
McLeish, Henry


Cummings, John
McWilliam, John


Cunliffe, Lawrence
Madden, Max


Dalyell, Tarn
Mahon, Mrs Alice


Darling, Alistair
Marek, Dr John


Davies, Ron (Caerphilly)
Marshall, David (Shettleston)


Davis, Terry (B'ham Hodge H'I)
Marshall, Jim (Leicester S)


Dixon, Don
Martin, Michael J. (Springburn)


Doran, Frank
Maxton, John


Douglas, Dick
Michie, Bill (Sheffield Heeley)


Duffy, A. E. P.
Michie, Mrs Ray (Arg'l &amp; Bute)


Dunnachie, Jimmy
Millan, Rt Hon Bruce


Dunwoody, Hon Mrs Gwyneth
Moonie, Dr Lewis


Eadie, Alexander
Morgan, Rhodri


Eastham, Ken
Mowlam, Marjorie


Evans, John (St Helens N)
Mullin, Chris


Ewing, Harry (Falkirk E)
Murphy, Paul


Ewing, Mrs Margaret (Moray)
Nellist, Dave


Fatchett, Derek
O'Neill, Martin


Fearn, Ronald
Orme, Rt Hon Stanley


Fields, Terry (L'pool B G'n)
Parry, Robert


Fisher, Mark
Patchett, Terry


Flannery, Martin
Pike, Peter L.


Foster, Derek
Prescott, John


Fyfe, Maria
Primarolo, Dawn


Galloway, George
Quin, Ms Joyce





Redmond, Martin
Straw, Jack


Reid, Dr John
Taylor, Mrs Ann (Dewsbury)


Robertson, George
Taylor, Matthew (Truro)


Robinson, Geoffrey
Turner, Dennis


Rogers, Allan
Wall, Pat


Ross, Ernie (Dundee W)
Walley, Joan


Rowlands, Ted
Wardell, Gareth (Gower)


Ruddock, Joan
Wareing, Robert N.


Sedgemore, Brian
Welsh, Andrew (Angus E)


Sheerman, Barry
Welsh, Michael (Doncaster N)


Short, Clare
Wigley, Dafydd


Skinner, Dennis
Williams, Alan W. (Carm'then)


Smith, Andrew (Oxford E)
Wise, Mrs Audrey


Smith, C. (Isl'ton &amp; F'bury)
Worthington, Tony


Smith, Cyril (Rochdale)
Young, David (Bolton SE)


Smith, Rt Hon J. (Monk'ds E)



Soley, Clive
Tellers for the Noes:


Stott, Roger
Mr. Frank Haynes and


Strang, Gavin
Mr. Ray Powell.

Question accordingly agreed to.

Resolved,
That, for the purposes of any Act resulting from the Education Reform Bill, it is expedient to authorise the payment out of money provided by Parliament of any sums required by the Secretary of State for making grants to promote learning or research or in respect of expenditure incurred or to be incurred for educational purposes.

STATUTORY INSTRUMENTS, &c.

Motion made, and Question put forthwith, pursuant to Standing Order No. 101 (Standing Committees on Statutory Instruments &amp;c.)

MERCHANT SHIPPING (PASSENGER BOARDING CARDS)

That the draft Merchant Shipping (Passenger Boarding Cards) (Application to non-United Kingdom Ships) Regulations 1988 be approved.

MERCHANT SHIPPING (SUPERSTRUCTURES AND BULKHEADS)

That the draft Merchant Shipping (Closing of Openings in Enclosed Superstructures and in Bulkheads above the Bulkhead Deck) (Application to Non-United Kingdom Ships) Regulations 1988 be approved.

SOCIAL SECURITY (PAYMENTS)

That the draft Social Security (Payments on Account, Overpayments and Recovery) Regulations 1988 be approved.

SOCIAL SECURITY (PREMIUMS)

That the draft State Scheme Premiums (Acturial Tables) Amendment Regulations 1988 be approved.—[Mr. Garel-Jones.]

Question agreed to.

Acute Beds (Fife)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Garel-Jones.]

Mr. Dick Douglas: It is an sign of how important my colleagues and I believe this issue to be that all Fife Members of Parliament are present, including my hon. Friend the Member for Cumbernauld and Kilsyth (Mr. Hogg), the Opposition Front Bench spokesman on health. We certainly outnumber the Scottish Conservative Members present.
The issue of acute bed provision in Fife, and the way in which the Under-Secretary of State for Scotland has behaved towards the people of Fife and the members of the Fife health hoard, illustrates the Government's scant regard for the opinions of people outside the House which differ from their own. It is a matter of common knowledge. I wish to quote from a letter to the Minister dated 4 March, from a large group practice in Dunfermline. Perhaps the Minister will give us some indication tonight
of how he will reply to the letter, which stated:
For twenty years and more, the integration of hospital medical services serving West Fife has been debated and in the meantime our patients have had to put up with a service, which, because of its lack of inter-specialty co-ordination, has left a lot to be desired.
The health board's current attempt—I use that word advisedly—to solve the problem goes back to at least 1983, when the board embarked upon a course of action that should have led to a relatively speedy decision by the Scottish Home and Health Department as to the best direction to be followed in Fife.
To obtain an approval in principle to its scheme or schemes the health board was obliged to conduct what has become known as an option appraisal exercise or study. It was the first such study to be undertaken in Scotland and was carried out by the health economics research unit of the university of Aberdeen. It was completed in May 1984.
I shall briefly enlighten the House on the concept of option appraisal. The first report of the Select Committee on Scottish Affairs 1986–87 on hospital provision states in paragraph 24:
The Board is required to undertake an Option Appraisal …examining the alternative ways of meeting the identified need in order to find the best solution.
The present so-called Minister for Health in Scotland was a member of that Committee and indeed was a signatory to that report. The Government reply to the Select Committee on 13 May, states in paragraph 11:
The systematic approach of option appraisal should reduce, rather than increase, the time taken in the planning stage.
There can be no argument that, in the case of the Fife health board, the need was not clearly defined and that the option appraisal exercise was not completed in a highly professional manner.
I shall not detain the House by going over all the health options that were put before the health board at that time. Realistically, those options came down to two that have become known as option C and option D. In shorthand terms, option C was based on the "equal" distribution of facilities and option D was based on what one might loosely call the "balance" of population in Fife. Suffice to say that, in June 1984, the Fife health board decided to proceed with option C.
I shall not weary the House with all the details of the meetings that have taken place between colleagues, myself and the various Tory so-called Ministers of Health. The House should be aware that the issue that we are discussing in the early hours of Tuesday morning was debated on 30 October 1986. In a letter to colleagues and myself on 3 December 1986, Lord Glenarthur, then Minister of State, Scottish Office, with responsibility for health, said:
I can confirm that it now very much up to the Board to decide whether they wish to proceed with Option C or Option D. They are not obliged to follow any recommendation made by the Buildings Division, and I assure you that neither I nor the Scottish Home and Health Department are seeking to influence the Board one way or other." Given that the board thought that the Minister was a man of his word it is not surprising that it confirmed its decision for option C in February 1987 and again in October 1987. In view of what has transpired since the hon. Member for Stirling (Mr. Forsyth) became Minister one would have thought that he has been faced with a politically hostile Fife health board.
I estimate that in 1979, out of 19 members of the Fife health board, 10 were Labour party members, or sympathetic to the aims of the Labour party. In 1988, only four of the 21 members can be considered to be either Labour party members or to have broad sympathy with the aims of the Labour party, despite the fact that there is not one Tory Member in the whole of Fife. That is really manipulating. I claim that the Minister and his predecessors tried to manipulate the membership of the Fife health board along their own political lines. So much for playing by the rules of the game. It is to the credit of the board members that they have maintained and sustained their views.
I now want to consider the crucial period during which the Minister has had the approval in principle scheme before him. I have been told that the Scottish Home and Health Department had placed the approval in principle on the Minister's desk in early December 1987 and that the Minister was to give his decision in January 1988.
The Minister wrote to Fife health board on 24 February 1988 stating:
I have considered carefully the Board's submission and have decided Option D is preferable to Option C.
The House should know that at no time was the Fife health board or its officials aware that the Minister had misgivings. At no time was a hint given that the Fife health board's preferred option was to be cast aside.
When he was wearing his education hat this morning, the Minister had the temerity to quote from a teacher who wrote in the Glasgow Herala. I want to quote again from the group practice to which I have already referred and from which the Minister has received a letter. That letter puts the point to the Minister. In fact, if he would pay attention, he may understand. The letter is dated 4 March —[Interruption.] The Minister has not received the letter. Still, I will quote from it. It states:
It seems to us that it would have saved a lot of time and money, if you"—
that refers to the Minister, not you, Mr. Deputy Speaker—
had simply considered the different options yourself without asking for the Health Board's recommendations, which you appear to have totally disregarded. The purpose of this letter is purely to record our disquiet and disgust at a decision which we believe is totally wrong. It would be naive of us to think that any opinions of ours would even be considered by a representative of a Government which has a reputation, growing by the minute, of paying no heed to local and informed ideas and carrying out its policies by diktat.


The Minister may snigger at that, but that is the view of politically active people. I have a copy of the letter and I am willing to give it to him. It is from the Netherton surgery in Dunfermline and is signed by everyone in the practice — Dr. Yellerly, Dr. Alexander, Dr. Orris, Dr. Alexander and Dr. White. To the best of my knowledge, they are not members of the Labour party. However, that is an expression of local opinion.
Regardless of the merits of the decision, the concern lies in the method of approach adopted by the Government. What is the effect of Government by diktat on the people of Fife? First there will be more delays and suffering. It will take another three or four months to prepare a new submission. Even if things go smoothly, phase 2 in Dunfermline will not be completed until at best 1994.
Secondly, I do not wish to pronounce judgment on Kirkcaldy, but given that little or nothing can be done there until Dunfermline phase 2 is completed, we shall be into the 21st century before anything is achieved. I am willing to give way to the Minister if he disagrees with that.
The Fife health board stated:
In view of the delay, the Board will have to commit capital resources to maintaining the existing facilities in Kirkcaldy. Already it has been identified that major work will have to be carried out in upgrading operating theatres and replacing the boiler-plant. Attention is now being given to these matters. The re-location of existing beds throughout Fife in view of changing medical practice and technology is also an ongoing exercise.
The board is saying that Dunfermline phase 2 will take nearly six years—until 1994—and the Minister is on record as saying that he will not consider approval in principle for Kirkcaldy until Dunfermline is completed. I am willing to listen to differences of view on this.
Thirdly, we are not even agreed on the number of beds we are talking about. The Fife health board says:
In his letter of 23 February, the Minister used for the first time a total of 855 existing acute beds and this figure was reached by including the 62 acute mixed beds in Adamson Hospital, Cupar, and St. Andrew's Memorial Hospital. The Minister said that the additional 59 acute beds in Dunfermline when added to the existing 855 beds will bring the total number of beds in Fife very close to the planning target of 918. From the time the acute bed option appraisal was started in 1982 the number of existing acute beds in Fife was calculated as 793 by both the Board and the Department. This number is reached by adding up all the acute beds in D. &amp; W.F., Milesmark, Victoria, Cameron, and Randolph Wemyss Hospitals. The number did not include the 62 acute mixed beds in Adamson Hospital, Cupar, and St. Andrew's Memorial Hospital.
Let us have some clarification of this, if possible. One of the Minister's opinions is that it would be difficult for a health board to anticipate carrying on two capital projects of this nature simultaneously. A few of my colleagues went the other week to Faslane and Coulport. Those two schemes amount to roughly £500 million. So when the Goverment want something done, it can be done. The necessary sources can be deployed. However, I warn my colleagues that, given the Minister's known views, if there is no change in the Government of Scotland there will be little hope of a solution to the problem of acute beds in Fife within the private sector. The Minister is looking for a delay that will force people in Fife to adopt the private sector option.
Having listened to the Minister today, first in his guise as a Minister with responsibility for education and then for health, I might be forgiven for using the term "Pooh Bah"

to describe him. He is a Lord High Everything. He does not quantify his approach. He gave an interview to the Dunfermline press in which not a single financial figure was mentioned. Behind that lies penny-pinching by the Treasury and the Government. If the Government wanted to alleviate the suffering for lack of acute beds in Fife that has gone on for a long time, the money could be supplied.
Pooh Bah is a wrong description. My knowledge of Gilbert and Sullivan leads me to suggest—I apologise to those who are not so knowledgeable—that the Minister is really King Gama from "Princess Ida". [Interruption.] You will not laugh when you hear it, brother. Taking a little liberty with the lyric, he might be summed up thus:
He has an irritating chuckle,
He has a celebrated sneer,
He has a most annoying snigger,
He has a despicable leer.
To everybody's prejudice he knows a thing or two.
If you want your poll tax estimated in half a minute, then he can,
And although he feigns to make himself the economic man, To everybody else he is such a disagreeable man.
That is the person we in Scotland have to suffer as the so-called Minister for Health and the so-called Minister of Education.

The Parliamentary Under-Secretary of State for Scotland (Mr. Michael Forsyth): I am grateful to the hon. Member for Dunfermline, West (Mr. Douglas) for raising this matter for debate—if not, perhaps, for the way in which he chose to do it. In the time that he has left me—having taken so much time to indulge in personal abuse—I shall try to answer some of the points that he has made.
The hon. Member seems somewhat aggrieved about what he sees as a decision to force the Fife health board to accept an option that it does not want. I should have thought that the hon. Gentleman would be glad that I had made a decision. Indeed, when he came to see me, he urged me to take a decision quickly. We did. We have made a decision which will bring considerable improvements to hospital facilities in Dunfermline.
The problem of acute hospital bed provision in Fife has been discussed for almost a decade, as the hon. Gentleman said. It is high time that the debate ended and we got the hospitals built. That can only be of benefit to the people of Fife as a whole, and especially to the hon. Gentleman's constituents.
Throughout the period of discussion, Fife health board has attempted to meet the needs of all the people in Fife, but its task has not been helped by the polarisation of views between east and west Fife, and the heat generated by that debate. I am delighted to see the hon. Member for Dunfermline, East (Mr. Brown) present. That debate has led some people to lose a sense of proportion about what is proposed. I was recently asked by the local paper why I was perpetuating a
cottage-hospital level of acute-bed provision for Dunfermline".
I am not aware of any cottage hospital in Scotland with 572 beds, but that will be the size of the hospital that will be completed under option D. It will compare favourably with other district general hospitals now being planned and built elsewhere.
There has also been talk about downgrading Dunfermline, but option D brings a new expansion of acute beds. We should be quite clear: we are proposing the


replacement of the acute and maternity beds in three aging hospitals, with a net increase of 59 beds in brand-new facilities.
The hon. Member should not look a gift horse in the mouth. He has said that my decision will further delay the development of new acute beds in Fife. That need not be so. The board has accepted my decision and is making every effort to expedite a new approval in principle submission for the reduced scale of provision at Dunfermline. I would expect the work to be completed within three months, and it is possible that the hospital, being smaller, will be open sooner than under option C. Further delays will, however, occur if the wrangling, which the lion. Gentleman seems intent on continuing, about opinions and options in Fife, continues indefinitely.
The hon. Member asked why I chose option D. It may be helpful to recall the background to the option appraisal exercise carried out in 1983, which considered in detail the five strategic options. Option A involved closing most of the acute beds in Dunfermline, with a substantial increase in patients treated in Edinburgh. Because of the inconvenience that that would bring to patients, the hoard rejected that option. Option B involved upgrading the existing hospitals in Dunfermline, but the board concluded that they were unsuitable for upgrading. Option E concentrated on all acute beds in the east of Fife at Kirkcaldy. That was considered unacceptable because of the inconvenience for residents in west Fife.

Mr. Douglas: Oh, come on, we know all that.

Mr. Forsyth: The hon. Gentleman may know all that, but his constituents may not. He asked me to justify the decisions taken by the SCottish Office, and I am attempting to do so.
The real choice lay between options C and D. Both options involved building a new hospital at Dunfermline and an extension to he Victoria hospital, Kirkcaldy and only the size of the two resultant hospitals varied beween options C and D. Option C provided an equal distribution of beds in west and East Fife so that when complete, the two hospitals at Dunfermline and Kirkcaldy would be the same size. To achieve that, two specialties—urology and ophthalmology — would transfer from Kirkcaldy to Dunfermline. Option D proposed to limit the increase in beds at Dunfermline, and to have proportionately more beds at Kirkcaldy to reflect the balance of population between east and west Fife.
The choice was by no means clear-cut; indeed, the health board had great difficulty in reaching its choice of option C. A substantial proportion of board members favoured option D, as did the board's own officers, two local health councils, a community council and the North-East Fife district council.

Mr. Douglas: Will the Minister give way?

Mr. Forsyth: I will not give way to the hon. Gentleman after the way that he has behaved during the debate.
In deciding on option D, I took a view of what was best for patients throughout Fife, taking account of the location of population and the need for patients to travel. Costs and the demands on the Scottish hospital building programme were other factors that I had to take into account. I firmly believe that option D gives fairer access to health care for all of Fife's residents.
The hon. Gentleman suggested that my noble Friend had been engaged in some sort of breach of faith, and that the letter sent to him gave undertakings that have now been broken.

Mr. Douglas: I will stand many things in this House, but I will not allow the Minister to assert that I said something that I did not say. I said that Lord Glenarthur had said certain things in good faith, and I quoted him in good faith. I ask the Minister to withdraw his remarks.

Mr. Forsyth: No doubt Hansard will make it clear that the hon. Gentleman said that he thought that the undertaking given by my noble Friend in his letter had not been fulfilled by the Scottish Office. That is not correct. The hoard was told that the preferred choice of options was a matter for it, on the basis that the costs and benefits of the two options were broadly similar. It was never possible to give any assurance that the resultant submissions would necessarily be endorsed. That would be to offer the hoard a blank cheque.
When I had the submission before me, with the full details of both options, it was clear that there were advantages in both cost and patient care from option D. The choice was not so evenly balanced as was first thought, and I could not, in all conscience, go along with the board's preference when it did not give the best deal for the majority of Fife patients and, moreover, had higher costs. We are, after all, talking about a multi-million pound investment that will serve the people of Fife for many years to come. The Government have a proper and legitimate interest in ensuring that the right decision is made, and I reject any suggestion that there has been a breach of faith.
The hon. Gentleman has suggested that the motivation for our decision has been cost and not concern about patient care——

Mr. Douglas: The Minister has admitted that.

Mr. Forsyth: No, I have not admitted anything of the sort—

Mr. Douglas: Hansard will show it.

Mr. Forsyth: I have not said anything of the sort. I have made it clear that a major factor in my decision was patient care. It seems to me beyond argument that the size of a hospital should match its catchment population, otherwise more people will have to travel further. That view is based on an analysis of the population spread in Fife carried out by the board's officers as part of the option appraisal. They concluded that a substantial proportion of the west Fife population is located to the east of Dunfermline in the Cowdenbeath and Lochgelly areas. For them, the distance and the public transport services to Dunfermline and Kirkcaldy are not dissimilar.

Mr. Gordon Brown: Will the Minister give way?

Mr. Forsyth: No.
A substantial proportion of the east Fife population is located to the north and east of Kirkcaldy — that is Glenrothes, Levenmouth, East Neuk and Cupar. For them, the distances to Dunfermline are much greater than to Kirkcaldy and the public transfer less convenient. Option D offers a better match between the size of the two hospitals and their catchment populations.

Mr. Henry McLeish: Will the Minister give way?

Mr. Forsyth: No.
It is equally beyond argument that we must get the best value from scarce resources and, happily, in this case the option that offered the best deal for patients was also the best in cash terms. Option D is marginally cheaper in absolute terms, and also made more even, and therefore more manageable, demands on central capital. Equally important, it is less demanding in revenue in the early years, so giving the board opportunity to continue its work for the mentally handicapped and elderly.
The hon. Member for Dunfermline, West has said that he is concerned that the requirement for Dunfermline to proceed first will cause long delays to the works at Kirkcaldy. That need not be so. The board has recognised, since before my time, that it makes sense to complete the

building at Dunfermline before starting work at Kirkcaldy. That point has been made by the hon. Member for Fife, Central (Mr. McLeish) in a local newspaper——

Dr. Lewis Moonie: No, for Kirkcaldy.

Mr. Forsyth: I apologise to the hon. Gentleman: I meant the hon. Member for Kirkcaldy (Dr. Moonie).
The board has recognised since before my time that it makes sense to complete the building at Dunfermline before starting work at Kirkcaldy.

Mr. McLeish: Will the Minister give way?

Mr. Forsyth: No, I have little time.
If the board proceeds——
The motion having been made after Ten o'clock on Monday evening, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at thirteen minutes to One o'clock.